17284final Report VCF Rajnandgaon With Summary

Final Report
Technical Assistance in Generating Revenue through Value Capture Financing Tools for Rajnandgaon
FINAL REPORT
TECHNICAL ASSISTANCE IN GENERATING REVENUE
THROUGH VALUE CAPTURE FINANCING TOOLS FOR
RAJNANDGAON
Client: State Urban Development Agency, Government of Chhattisgarh
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Final Report
Table of Contents
TABLE OF CONTENTS ............................................................................................................................................ 2
LIST OF FIGURES ................................................................................................................................................... 6
LIST OF TABLES .................................................................................................................................................... 7
LIST OF ABBREVIATIONS ....................................................................................................................................... 8
EXECUTIVE SUMMARY ........................................................................................................................................... 9
1 BACKGROUND ............................................................................................................................................ 17
1.1 INTRODUCTION TO VALUE CAPTURE FINANCE ................................................................................................ 18

1.2 OBJECTIVE OF STUDY ............................................................................................................................... 20
1.3 SCOPE OF THE ASSIGNMENT ...................................................................................................................... 20
1.4 NEED OF VCF FOR RAJNANDGAON ...................................................................................................... 21
2 VCF TOOLS ................................................................................................................................................. 24
2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA ................................................................................ 24

2.1.1 Land Value Tax ................................................................................................................................ 24
2.1.2 Development Charges (Impact Fee) ................................................................................................ 25
2.1.3 Betterment Levy .............................................................................................................................. 26
2.1.4 Vacant Land Tax.............................................................................................................................. 27
2.1.5 Fee for Changing Land Use ............................................................................................................. 27
2.1.6 Transfer of Development Rights (TDR) ............................................................................................ 28
2.1.7 Premium on Additional FSI/FAR ...................................................................................................... 29
2.1.8 Land Pooling System ....................................................................................................................... 29
2.1.9 Land Acquisition and Development ................................................................................................ 30
2.1.10 Tax Incremental Financing (TIF) ................................................................................................. 30
2.2 ADDITIONAL LAND BASED FISCAL TOOLS IN INDIA............................................................................... 33
2.2.1 Regularization of Unauthorized Development ................................................................................ 33
2.2.2 Property Development for Leasing ................................................................................................. 33
2.2.3 Charging Extra Stamp Duty ............................................................................................................. 33
2.2.4 Purchasable Development Control Regulations .............................................................................. 34
3 CITY PROFILE.............................................................................................................................................. 36
3.1 DEMOGRAPHIC PROFILE ............................................................................................................................ 36
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3.2 CITY GROWTH ......................................................................................................................................... 40

3.3 ECONOMIC PROFILE ............................................................................................................................... 41
3.4 REAL ESTATE .......................................................................................................................................... 43
3.5 RESIDENTIAL AND COMMERCIAL DEVELOPMENTS ............................................................................. 44
3.6 INFRASTRUCTURE .................................................................................................................................... 45
3.7 SMART CITY PROPOSAL ............................................................................................................................ 46
3.7.1 Area Based Development ................................................................................................................ 46
3.7.2 Pan City Solution ............................................................................................................................. 48
3.7.3 Costing ............................................................................................................................................ 48
3.8 AMRUT ................................................................................................................................................. 48
3.9 MUNICIPAL PROPERTIES ............................................................................................................................ 49
4 EXISTING LAND BASED FISCAL TOOLS IN RAJNANDGAON .......................................................................... 53
4.1 FINANCIAL POSITION OF MUNICIPAL CORPORATION RAJNANDGAON ................................................................... 53

4.2 LEGISLATIVE BACKING ............................................................................................................................... 58
4.2.1 The Chhattisgarh Municipal Corporation Act, 1956 ....................................................................... 58
4.2.2 The Chhattisgarh Municipal Corporation and Municipalities (Registration of Colonizer, Term and
Conditions) Rules, 2013. ............................................................................................................................... 60
4.2.3 Notification No. F 7-8/2011/18 Dated 5th January 2016 ............................................................... 61
4.2.4 The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 ...................................................... 63
4.2.5 The Chhattisgarh Nagar Tatha Gram Nivesh Niyam, 1975. ............................................................ 66
4.2.6 The Chhattisgarh Bhumi Vikas Rules, 1984 ..................................................................................... 67
4.2.7 The Chhattisgarh Land Revenue Code, 1959 .................................................................................. 70
4.2.8 Rules regarding Alteration of Assessment and Imposition of premium for the purpose of levy of
premium on Agricultural land ...................................................................................................................... 71
4.2.9 Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972 ................................................................... 71
4.2.10 Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam, 2002. .......................................... 72
4.2.11 Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran (Sanshodhan) Adhiniyam, 2003. ................... 72
4.2.12 The Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Niyam, 2002 ........................................... 73
4.2.13 Chhattisgarh Anadhikrlt Vikas Ka Niyamltikaran (Sanshodhan) Adhiniyam, 2016 .................... 74
4.3 VCF TOOLS IN PRACTICE IN CHHATTISGARH / RAJNANDGAON ........................................................................... 75
4.3.1 Property tax .................................................................................................................................... 75
4.3.2 Building Permission Fee (Bhawan Anugya Shulk) ........................................................................... 78
4.3.3 Development Charges (Vikas Shulk)................................................................................................ 81
4.3.4 Regularisation Charges (Samjhota / Rajinama Shulk) .................................................................... 82
4.3.5 Property Development and Leasing ................................................................................................ 84
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5 IDENTIFICATION OF APPLICABLE VCF TOOLS FOR RAJNANDGAON ............................................................. 88
5.1 PROPERTY TAX........................................................................................................................................ 88

5.1.1 Revenue Potential from Property Tax/ Fee ..................................................................................... 88
5.1.2 Cost-Benefit Analysis....................................................................................................................... 91
5.2 REVENUE POTENTIAL FROM IMMOVABLE PROPERTIES UNDER MCR ................................................. 92
5.3 BUILDING PERMISSION FEE ......................................................................................................................... 95
5.4 DEVELOPMENT CHARGES .......................................................................................................................... 97
5.5 PREMIUM ON RELAXTION OF RULES OR ADDITIONAL FSI/FAR .......................................................................... 99
5.5.1 Revenue Potential from Premium on relaxation of rules or additional FSI/FAR ........................... 100
5.5.2 Cost-Benefit Analysis..................................................................................................................... 101
5.6 REVENUE FROM STREET VENDORS............................................................................................................ 101
5.7 REVENUE FROM PARKING ........................................................................................................................ 102
5.8 STAKEHOLDER CONSULTATIONS ............................................................................................................... 103
6 IMPLEMENTATION FRAMEWORK ............................................................................................................... 105
6.1 IDENTIFICATION OF CLAUSES TO BE AMENDED ................................................................................ 105

6.1.1 Rationale for Change in Area Based Rates of Building Related Fee .............................................. 105
6.1.2 Power of Government to abolish, suspend or reduce the amount or rate of any tax under the
Chhattisgarh Municipalities Act, 1961. ...................................................................................................... 106
6.1.3 Rationale for change in Rates of Premium on diversion of land use under The Chhattisgarh Land
Revenue code, 1959 (Rules regarding Alteration of Assessment and Imposition of premium for the
purpose of levy of premium on Agricultural land) ..................................................................................... 107
6.1.4 Rationale for enacting Law/Rules for levy of Conversion charges on change of land use in urban
areas from residential to commercial / industrial use and for sub-division, and amalgamation of plots: 109
6.1.5 Rationale for change in Rates of Betterment Charges under the Chhattisgarh Griha Nirman
Mandal Adhiniyam, 1972 ........................................................................................................................... 112
6.1.6 Rationale for enacting new provisions for levy of Infrastructure development tax on big residential
properties/complexes and on non-residential properties. ......................................................................... 114
6.1.7 Rationale for levy of Infrastructure Development Charge as well as of Infrastructure
Augmentation Charge on change of land use/diversion of land use: ........................................................ 116
6.1.8 Rationale for making provision in law for charging Premium on Additional FAR/FSI: .................. 118
6.1.9 Rationale for levy of Certain Fee/Charges in Chhattisgarh levied by the State Government in
Rajasthan ................................................................................................................................................... 122
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6.1.10 Rationale for levy of Land and Building Tax on the market value of lands and buildings in
Chhattisgarh as levied by the Municipal Corporations in Rajasthan. ........................................................ 125
6.2 PROPOSED AMENDMENTS ........................................................................................................................ 126
6.3 ACTS/SECTIONS/RULES/BYE-LAWS /NOTIFICATIONS TO BE AMENDED ............................................................... 127
6.3.1 Amendment of Section 187A of The Chhattisgarh Municipalities Act. 1961- ............................... 127
6.3.2 Amendment of Section 339B of the Chhattisgarh Municipalities Act. 1961 ................................. 127
6.3.3 Amendment of Rule 8 of The Chhattisgarh Municipal Corporation and Municipalities (Registration
of colonizer, term and conditions) Rules, 2013. ......................................................................................... 128
6.3.4 Amendment of Rule 11 of The Chhattisgarh Municipal Corporation and Municipalities
(Registration of colonizer, term and conditions) Rules, 2013 .................................................................... 129
6.3.5 Amendment in section 349 of the Chhattisgarh Municipalities Act, 1961 .................................... 129
6.3.6 Amendment of Section 163-A of The Chhattisgarh Municipal Corporation Act, 1956. ................ 130
6.3.7 Amendment of Section 308-B of the Chhattisgarh Municipal Corporation Act, 1956. ................. 130
6.3.8 Amendment of Rule 12 of The Chhattisgarh Nagar Tatha Gram Nivesh, Niyam, 1975. ............... 130
6.3.9 Amendment of Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 ..... 131
6.3.10 Amendment of Rule 21(3) of The Chhattisgarh Bhumi Vikas Rule, 1984 ................................. 132
6.3.11 Amendment of Rule 95 of The Chhattisgarh Bhumi Vikas Rules, 1984 .................................... 134
6.3.12 Amendment of section 258 of The Chhattisgarh Land Revenue Code, 1959 regarding premium
on diversion of land use. ............................................................................................................................ 135
6.3.13 Amendment of Rule 14 of the Rules regarding Alteration of Assessment and Imposition of
premium for the purpose of levy of premium on Agricultural land............................................................ 135
6.3.14 Amendment of Section 51 of the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972 relating
to Betterment charges. .............................................................................................................................. 136
6.4 NEED FOR SEPARATE ACCOUNTING FOR DIVERSION CHARGES, CONVERSION CHARGES, BETTERMENT CHARGES AND
BETTERMENT LEVY: ............................................................................................................................................. 137
6.5 TIMELINE FOR IMPLEMENTATION ................................................................................................................ 137
6.5.1 Short term action (up to 1 year): .................................................................................................. 137
6.5.2 Medium term action plan (1 to 3 years): ...................................................................................... 138
6.5.3 Long term actions (more than 3 years): ........................................................................................ 140
6.6 CONTRACTUAL AGREEMENTS/ MOU ETC. (TO BE ADDRESSED DURING HANDHOLDING PHASE IN CONSULTATION WITH
STAKEHOLDERS) ................................................................................................................................................. 140
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List of Figures
Figure 1 : Diagrammatic Presentation of the Concept of VCF .............................................................................. 19

Figure 2: Diagrammatic Presentation of the Concept of VCF ............................................................................... 20
Figure 3 : Regional Setting of Rajnandgaon ......................................................................................................... 37
Figure 4 : Planning Boundaries of Rajnandgaon................................................................................................... 38
Figure 5 : Population Growth of Rajnadgaon from 1971 to 2011 .......................................................................... 38
Figure 6: Ward Map of Rajnandgaon ................................................................................................................... 39
Figure 7 : Spatial growth map of Rajnadgaon ....................................................................................................... 41
Figure 8 : Distribution of Workers in Rajnandgaon................................................................................................ 42
Figure 9: YOY increased in number of Industries vis-a-vi increase in the employment ........................................ 42
Figure 10 : DLC land rate for Rajnadgaon ............................................................................................................ 43
Figure 11 : SMART city intervention area in Rajnandgaon ................................................................................... 46
Figure 12 : City-wise investment under AMRUT during 2015-2020 ...................................................................... 48
Figure 13 : Sector-wise investment in Rajnandgaon under AMRUT ..................................................................... 49
Figure 14: Revenue Receipt (in Rs. Lakh) Trends for Municipal Corporation Rajnandgaon ................................. 55
Figure 15: Tax Revenue Receipt (in Rs. Lakh) Trends for Municipal Corporation Rajnandgaon .......................... 56
Figure 16: Non-Tax Revenue Receipt (in Rs. Lakh) for FY 2015-16 for Municipal Corporation Rajnandgaon ..... 56
Figure 17: Rental income from Municipal Properties and Civic Amenities (in Rs. Lakh) trends ............................ 57
Figure 18: Revenue Expenditure (in Rs. Lakh) Trends for Municipal Corporation Rajnandgaon .......................... 58
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List of Tables
Table 3-1: Ward-wise Population of Municipal Corporation Rajnandgaon ............................................................ 39

Table 3-2 :Ward-wise Distribution of Residential and Commercial Properties in Rajnandgaon ............................ 44
Table 3-3: Project-wise details of the Area Based development interventions..................................................... 47
Table 3-4 : Details of immovable properties in MCR ............................................................................................. 49
Table 3-5 : Details of the leased properties under MCR ....................................................................................... 50
Table 4-1: Revenue Receipts Status at a Glance – Municipal Corporation of Rajnandgaon (in INR Lakhs) ....... 54
Table 4-2: Expenditure Status at a Glance – Nagar Palika Nigam Rajnandgaon (in INR Lakhs) ........................ 57
Table 4-3 : Property tax revenue (in Rs. lakhs) ..................................................................................................... 76
Table 4-4 : Annual letting value for land (Rs. per sqft) .......................................................................................... 76
Table 4-5 : Zone wise annual letting value for (Rs. per sqft) for building on built up area ..................................... 76
Table 4-6 : Property tax rate is defined as under (applicable since 30.03.2016) .................................................. 77
Table 4-7 : Revenue from building permission charges (In Rs. lakhs) .................................................................. 79
Table 4-8 : Revenue from Renting of Municipal Properties (In Rs. lakhs)............................................................. 85
Table 5-1 : Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Commercial
Properties.............................................................................................................................................................. 89
Table 5-2 : Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Residential Properties
.............................................................................................................................................................................. 89
Table 5-3 : Property Tax amount as percentage of Land Values for Commercial properties................................ 89
Table 5-4 : Property Tax amount as percentage of Land Values for Residential properties ................................. 90
Table 5-5: Cost – Benefit Analysis for Property Tax/ Fee .................................................................................... 91
Table 5-6: Monthly Lease Rent viz-a-viz Prevailing Market Rent of Shops/ Sheds owned by MCR ..................... 92
Table 5-7: Potential Revenue from Shops under MCR ......................................................................................... 94
Table 5-8 : Cost – Benefit Analysis for Leasing of Immovable Properties of MCR ............................................... 95
Table 5-9 : Building Permission Fee amount as percentage of Land Values ........................................................ 96
Table 5-10: Cost – Benefit Analysis for Building Permission Fee ......................................................................... 97
Table 5-11: Analysis of currently charged Development charges as a percentage of value of underlying asset .. 98
Table 5-12: Cost – Benefit Analysis for development charges .............................................................................. 99
Table 5-13: Cost – Benefit Analysis for purchasable FAR .................................................................................. 101
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List of Abbreviations
AMRUT Atal Mission for Rejuvenation and Urban Transformation

CHB Chandigarh Housing Board
CAGR Compound Annual Growth Rate
CBUD Capacity Building for Urban Development
CIL Community Infrastructure Levy
CLU Change of Land Use
CSR Corporate Social Responsibility
EDC External Development Charges
FAR Floor Area Ratio
FSI Floor Space Index
GDP Gross Domestic Product
GHMC Greater Hyderabad Municipal Corporation
GIS Geographic Information System
GST Goods and Service Tax
HPEC High Powered Expert Committee
HUDA Haryana Urban Development Agency
JnNURM Jawaharlal Nehru National Urban Renewal Mission
LBFT Land Based Fiscal Tools
Lpcd Litres per capita per day
MC Municipal Corporation
MCR Municipal Corporation Rajnandgaon
MMRDA Mumbai Metropolitan Region Development Authority
MoUD Ministry of Urban Development
NH National Highway
PPP Public Private Partnership
PSM Per square metre
SBA Swachh Bharat Abhiyan
SBM Swachh Bharat Mission
SH State Highway
TDR Transferable Development Rights
TIF Tax Increment Financing
UIBT Urban Infrastructure Benefit Tax
ULB Urban Local Body
VAT Value Added Tax
VCF Value Capture Financing
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EXECUTIVE SUMMARY
BACKGROUND
Rajnandgaon is often known as the “Gateway Town of Chhattisgarh. Government has been staking infrastructure
development initiatives under AMRUT through development of water supply, sewerage and development of
parks & green spaces, with a budgetary provision of development of parks & green spaces are being
implemented under AMRUT with a budgetary provision of Rs. 241.68 crore out of which Rs. 48.33 crore are to
be funded by the ULB. In addition, the state government is also developing Rajnandgaon as “Smart City”. The
total projected cost for the Smart City Proposal (SCP) for Rajnandgaon which includes both the Area Based
Development Plan and the Pan-City Plan is INR 1974.49 crores. In order to fund the AMRUT and Smart City
Area Based and PAN City projects and to carry out other functions, the ULB has to scout for avenues for
alternate sources of income to meet the demand for the infrastructure. This necessitates development of Value
Capture Financing Framework so that dependence of ULB on grants can be reduced.
OBJECTIVE OF ASSIGNMENT
The key objectives for this study is to conceptualize and develop a framework (including procedural, legal and
institutional aspects) to generate revenue through VCF tools for Rajnandgaon, so as to effectively capture the
additional land/ property value generated through public investments made as part of the implementation of the
AMRUT.
ACTIVITIES UNDERTAKEN
To achieve the above stated objective of the assignment, the following activities / tasks were undertaken in
accordance with the terms of reference:
• Plan work for the assignment
• Study of reports viz. Land Based Fiscal Tools and Practices for Generating Additional Financial Resources,
August 2013 supported under Capacity Building for Urban Development project (CBUD) - A partnership
program between Ministry of Urban Development, Government of India & The World Bank; Value Capture
Financing Policy Framework, Ministry of Urban Development, Government of India, February 2017 and
material published in various workshops and seminars.
Deliverable – Inception Report
• Analysis of various VCF tools available and practices of the same within India and abroad.
• Collection of relevant data for Rajnandgaon
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• Assessment of land based fiscal tools in Chhattisgarh / Rajnandgaon and their legislative backing
• Efficacy of existing land based fiscal tools
• Stakeholder consultations
• Identification of appropriate VCF tools for the State / ULB including their cost benefit analysis and
development of VCF framework.
• Short, medium and long-term implementation plan
• Identification of clauses to be amended at State/ ULB level, rationale behind the same and suggested
amendments.
Deliverable – Draft Report 1
• Presentation of ULB officials
• Incorporation of changes suggested indicated by the ULB officials.
Deliverable – Draft Report 2
• Presentation of ULB officials
• Incorporation of changes suggested indicated by the ULB officials.
Deliverable – Final Report
IDENTIFICATION OF APPROPRIATE VCF TOOLS FOR RAJNANDGAON
Property Tax
During 2015-16, Municipal Corporation Rajnandgaon has collected a revenue of Rs. 2.53 crore from property
tax. For the purpose of property tax the area under Municipal Corporation is divided into 5 zones. The property
tax is charged as a percentage of the annual letting value of the property. The letting values for ground floor
across the five zones vary from Rs. 29 per sq ft for zone 1 to Rs. 14 per sq ft for zone 5. The land values
(collector rate) in Rajnandgaon varies from Rs. 1900 per sqm to Rs. 61000 per sqm. The variation in land values
is almost 30 times whereas the variation in letting values is only 2 times. The letting values hence fail to
distinguish between high value and low value properties properly.
An analysis of property tax based on annual letting value vis-à-vis the land values based on Collector Rates
reveals that commercial properties with lowest land value of Rs. 1900 per sqm is paying property tax @ 0.99% of
the land value whereas the properties with highest land value of Rs. 61000 per sqm is paying property tax @
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0.1% of the land value. Similarly, when the existing property tax on annual letting value for residential properties
is translated to land value, it is seen that the properties with lowest land value of Rs. 1900 per sqm is paying
property tax @ 1.31% of the land value whereas the properties with highest land value of Rs. 61000 per sqm is
paying property tax @ 0.10% of the land value.
There are approximately 40000 residential properties in Rajnandgaon. If the smaller plots, say, smaller than 200
square meters estimated to be 8000 (@ 20%) are excluded, from the levy of Land and Building Tax and estimate
average size of the balance taxable plots numbering 32000 to be 200 square meters each and the average
market price of land to be Rs. 10000/- per square meter (the minimum being Rs.1900/- per square meter and
going up to Rs.61000/- per square meter) an average plot of 200 square meters would be values at Rs.2000000/-
and the annual Land and Building Tax for each property @ 1% of the market value would come to Rs 20000/-.
Thus collection of Rs. 64 crores from the levy of Land and Building Tax from 32000 residential properties can be
envisaged.
Further there are approximately 2500 commercial properties in Rajnandgaon. With average market price of land
as Rs. 10000/- per square meter and an average plot of 20 square meters, the value of land per commercial
property would be Rs.200000/-. The annual Land and Building Tax for each property @ 1% of the market value
would come to Rs 2000/-. Thus collection of Rs. 0.50 crores from the levy of Land and Building Tax from 2500
commercial properties can be envisaged.
Recommendations:
• All the properties to be mapped and linked to GIS.
• Any new building to be added to the GIS data base before giving the completion certificate.
• Online system of demand and collection to be introduced.
Time Lines:
• GIS Mapping of all properties – A Short Term Measure (0-1 year).
• Move from area-based method to value based method will need amendment in Act – A Short Term Measure
(0-1 year).
• Introduction of on-line system for demand and collection of property tax may be targeted in Medium Term (1-
3 years).
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Rental Income from Immovable Properties

Rental income from municipal properties is through leasing of properties (shops) owned by Municipal
Corporation Rajnandgaon (MCR). During FYs 2015-16 and 2014-15, MCR has collected Rs. 3.91 crore and Rs.
2.83 crore respectively from leasing of municipal properties. The shops are leased by MCR through auction. The
lease period generally is 10 years and the lease agreements has variable provisions for escalation. It is observed
that the charged monthly rent in most of the cases is significantly lower as compared to the prevailing market
rentals. It is suggested that for auction the minimum reserve price is kept at 80% of the lowest prevailing market
rentals in that area and the lease agreement should have annual escalation clause of 10% to 15%. On the expiry
of the lease period the reserve price should again be looked at for necessary corrections in comparison to the
prevailing market prices. In the re-auction, the out-going lessee may be provided with the first right of refusal on
the lease amount offered during the re-auction. This process will ensure bouyancy in the lease rents. Following
this line of approach, the yearly revenue of MC may increase from the current level of Rs. 3.91 crores per year to
Rs. 20 crores per year.
Recommendations:
• Rationalization of lease rent of Municipal shops in line with the prevailing market rentals.
Time Lines:
• Any new leasing should be worked out based on prevailing market rents – A Short Term Measure (0-1
years).
• Introduction of on-line system for collection of lease rent may be targeted in Medium Term (1-3 years).
Building Permission Fee

The building permission fee in Rajnandgaon is area based (Rs. 11 to Rs. 30 per sqm for residential and Rs. 16.5
to Rs. 45 per sqm for commercial) and does not take into account the market value (Collector Rate) of the
underlying asset, hence fails to capture value. An analysis of the Building Permission Fee reveals that the fee on
low valued plots is multiple times higher than the plots which are high valued. Therefore, the area-based rates
are iniquitous and results in loss of substantial revenue. It is therefore suggested to charge the Building Fees
based on the land value without increasing the total liability for the citizen who holds plots with lesser market
value. This can be done by applying the effective rate of Building Fee as a percent @ 1.05% of notified land rate
applicable to the lowest land rate (Rs. 1,900/- per sqm) to all land parcels. During the FY 2015-16, RMC
collected Rs. 9.79 lakhs from building fee. If land value base approach is adopted, the potential revenue can
enhance by 7 to 8 times thereby resulting in potential revenue of about Rs. 75 to 100 lakhs per annum from
Building Fee.
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Recommendations:
• Rationalization of Building Permission Fee based on the Collector Rate of land.
Time Lines:
• Move from area-based method to value based method will need amendment in Act – A Medium Term
Measure (1-3 years).
• Introduction of on-line system for collection of building construction fee may be targeted in Medium Term (1-3
years).
Development Charges
The Development Charges in Rajnandgaon are currently levied at INR 6.5 per sqft on plot area for all type of
developments / properties. The method of calculation of development charges does not take into account the
market value of the underlying asset, hence fails to capture value. The method also lacks buoyancy. An analysis
of Development Charges reveals that the development charges when translated to the land value (Collector
Rate) on low valued plots works out at around 3.68% of the land value (Collector Rate) and around 0.11% of the
land value for highest valued plots. Therefore, the prevailing area-based rates are iniquitous and results in loss of
substantial revenue. It is therefore suggested to levy the Development Charges based on the land value without
increasing the total liability for the citizen who holds plots with lesser market value. This can be done by applying
the effective rate of Development Charges @ 3.68% of notified land rate applicable at present to the lowest land
rate (Rs. 1900/- per sqm) to all land parcels. If the development charge is levied @ 3.68% (the rate which
currently is levied on the land parcels with least value) of the land value, the current average rate of Rs. 70 per
sqm will increase to Rs. 547 per sqm. This will result in an increase in revenue of the ULB under this head by
almost 8 times.
Recommendations:
• Rationalization of Development Charges based on the Collector Rate of land.
Time Lines:
• Move from area-based method to value based method – A Short Term Measure (0-1 years).
• Introduction of on-line system for collection of development charges may be targeted in Medium Term (1-3
years).
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Premium on Relaxation of Rules or Additional FSI/FAR

The instances of unauthorised construction are very high in the city of Rajnandgaon. It represents the need for
regulating and institutionalizing value capture tool of charging a premium on additional FAR. The base FAR in
Rajnandgaon is 1.5. It is suggested to provide for a sell-able FAR up to additional 0.25. There are approximately
40000 houses in Rajnandgaon. The total area under the houses @ 200 sqm per house works out at 8.0 million
sqm. If 5% house owners go for purchase-able FAR of 0.25, this would result in selling of 100000 sqm of area
under additional FAR. The average circle rate for plots in Rajnandgaon works out at Rs. 8000 to Rs. 1000 per
sqm and if the purchasable FAR is charged at 50% of prevailing circle rate this would result in potential revenue
of Rs. 40.0 crore to Rs. 50 crore.
Recommendations:
• Introduction of provision of sell-able FAR in the Act.
Time Lines:
• Require concurrence from State Legislative Assembly – A Medium Term Measure (1-3 years).
Revenue from Street Vendors

The street vendors in Rajnandgaon were charged a fee of Rs. 2 per day before it was abolished in 2002. At
present vending fee of Rs. 30 per month is charged from registered vendors of ‘haat bazaar’ i.e. municipal
market. The estimated number of street vendors in Rajnandgaon @ 2% of 163114 – population as per census
2011, works out approximately at 3260. Bhadoria Chowk, Mahamaya Basantpur Chowk, Nandai Chowk, Old Bus
Stand, Basantpur Stadium Road, Haat Bazar Chowk, Indira Nagar Chowk, Zila Aspatal (District Hospital), Post
Office to Railway Station, etc are the prominent locations for street vendors. It is felt that there should be a
system in place to regulate street vending. For this purpose, the Municipal Corporation should register all the
vendors in the city at a nominal fee to be decided by the ULBs based on any reliable means of identification.
Registration should be renewed after every three years.
Based on the data collected during the survey of vendors in 2014 for Durg town, it was observed that the
average monthly income of street vendor is approximately Rs. 5500/- per month. If Rajnandgaon Municipal
Corporation fix the monthly maintenance charges at Rs. 50/- (approximately 1% of average monthly income), the
potential annual revenue could be Rs. 1.63 lakh. At 2% i.e. at a rate of Rs. 100/- per month, the potential annual
revenue for the ULB could be Rs. 3.25 lakh.
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Revenue from Parking

Provision of organized and controlled parking spaces is a big challenge in Rajnandgaon. The space below
flyovers and shoulders can be used for organized paid parking at locations like Vivekanand Nagar to Dr. Bheem
Rao Ambedkar Chowk, Digvijay Stadium to District Court, Guru Nanak Chowk to Mahavir Chowk, Mahavir
Chowk to Bhagat Singh Chowk and Bhagat Singh Chowk to Post Office Chowk. Recently the stretch between
Post Office Chowk to City Kotwali Chowk has been auctioned for organized and controlled parking to a private
vendor on a yearly fixed charge of Rs. 2,85,320/-.
On similar line the stretches mentioned above can be auctioned, say at Rs. 2,00,000 per year. This could give
the Municipal Corporation an additional revenue of Rs. 10 lakh per year and would also solve the parking issues
within the city to some extent. Further the ULB should also explore levying of parking charges based on duration
of parking. The basic minimum parking charges may be defined for two hour duration and post that it should get
enhanced for every two hours duration.
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CHAPTER 1 :
BACKGROUND
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1 BACKGROUND
Rapid urbanization in India has led to increased demand for providing state-of-art infrastructure in Urban Local
Bodies (ULBs) and the ULBs are continually looking for new sources of funds in order to meet the requirements
of creating and upgrading infrastructure. In view of the challenges faced by the ULBs in making investments
towards infrastructure, the Ministries and Departments of the Government of India have to make lumpy
investments for infrastructure development at various levels.
As part of the systematic efforts to improve the urban infrastructure Swachh Bharat Abhiyan (SBA) or Swachh
Bharat Mission (SBM) or Clean India Mission was launched in October 2014. SBM is a campaign that aims to
clean up the streets, roads and infrastructure of India's cities, smaller towns, and rural areas. National Heritage
City Development and Augmentation Yojana (HRIDAY) was launched in January 2015 with the aim of bringing
together urban planning, economic growth and heritage conservation in an inclusive manner to preserve the
heritage character of each Heritage City. The Smart Cities Mission launched in June 2015 is an urban renewal
and retrofitting program with a mission to develop 100 cities all over the country making them citizen friendly and
sustainable. Atal Mission for Rejuvenation and Urban Transformation (AMRUT) was also launched in June 2015
and aims to establish infrastructure that could ensure adequate robust sewage networks and water supply for
urban transformation.
Several reports such as India Infrastructure Report 2009, High Powered Expert Committee (HPEC) Report 2011
and Working Group for the Twelfth Five Year Plan (2012-2017) have identified the significance of Land Based
Fiscal Tools (LBFTs) in the management of India’s urbanization, thereby providing the necessary impetus for
concentrated efforts in this direction.
A report prepared by McKinsey has estimated that in order to keep infrastructure at pace with development and
requirements of the cities in India, an annual investment of Rs. 3,25,000 crore in urban infrastructure is required.
The High Powered Expert Committee (HPEC) Report 2011 projects urban infrastructure requirement to increase
from the current 0.75% of Gross Domestic Product (GDP) to 1.5% by 2031, i.e. Rs. 97,500 crore to Rs. 195,000
crore annually. However, at present the National Urban Missions are investing approximately Rs. 32,500 crore
annually, leading to an investment gap of Rs. 65,000 crore every year.
About Rupees One Lakh Crore investment on urban development under Smart Cities Mission (covering 100
cities) and the Atal Mission for Rejuvenation and Urban Transformation (covering 500 cities) has already been
approved by the central government. The 99 cities selected so far in the Smart City Challenge competition have
proposed an investment of over Rs 2,01,979 crore impacting an urban population of over 9.95 crore. In the
Smart City Challenge Proposals, apart from mission grants, cities have identified multiple other sources of
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revenue such as Public Private Partnership (PPP), Convergence with other schemes of Government of India,
Corporate Social Responsibility (CSR), Market Borrowings, Own Sources, etc. to finance the identified
infrastructure investments. Hence, strengthening the fiscal position of the ULB is necessary.
The State Governments generally fixes the rate for services being provided by ULBs, even though these
functions are mandated to be performed by ULBs under the 74th Constitutional Amendment. Overall, this has led
to increased dependency on State Governments and reduction in efforts made by ULBs to mobilize resources. In
order to address this situation and make ULBs more independent, Value Capture Finance (VCF) aims to identify
other sources of revenue, with special emphasis on land.
Own sources of revenue in ULBs can be classified into three categories, (i) taxes levied by the ULB, (ii) user
charges levied for provision of civic services, and (iii) fees and fines levied for performance of regulatory and
other statutory functions. At present the main source of revenue for any ULB is property tax, which has issues
related to its narrow tax base, exemptions, etc.
Land is the most fundamental asset that is owned and managed by the ULBs and is a resource to generate
revenues. The ULBs in past have tried to capture the value of land. However, for various reasons the
concentrated efforts did not resultant into desired objectives. The ULB cannot depend endlessly either to Centre
or the State to provide them with the “Grant” for creation and up-keeping of the infrastructure. The ULBs should
therefore look at alternate sources of revenue – Land Based Fiscal Tools (LBFT) is one of them.
1.1 INTRODUCTION TO VALUE CAPTURE FINANCE
Value Capture as practiced widely in the world is based on the principle that private land and buildings benefit
from public investments in infrastructure and policy decisions of Governments. Value capture is a type of public
financing tool to realize some or all of the value that public infrastructure and/or policy decisions of government
generates for private landowners. It refers to recovery of a share of the increment in land/property value,
because of actions other than the land/property owner’s investments. Appropriate Value Capture Financing
(VCF) tools can be deployed to capture a part of the increment in value of land and buildings. These can be used
to fund projects being set up for the public by the Central/State Governments and ULBs. This generates a
virtuous cycle in which value is created, realized, captured, and recycled again for project investment (Refer
Figure 1.1).
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Figure 1 : Diagrammatic Presentation of the Concept of VCF

Source: Knight Frank Research
Public regulations, policies and investments are the starting point for a VCF process, resulting in value creation.
Private owners start realizing the value created on account of implementation of such policies, investments and
regulations.
The concept of VCF dates back to 1976. In the Vancouver Action Plan of the United Nations, it was proclaimed
that “the unearned increment resulting from the rise in land values resulting from changes in use of land, from
public investments or decisions, or due to the general growth of the community must be subject to appropriate
recapture by public bodies”. The basic principle is that creation of infrastructure or facilities result in positive
externalities which drive up the value of the land privately held by communities. Although, the increase may not
be realized (in the short, medium or long term) by the owner1, there is a need to capture this incremental value. It
is important to note that the concept of value here is implicit in nature. Figure 1.2 depicts this concept of VCF.
1 The increased value will be realized only when the land is offered for sale or is redeveloped. This may happen for some
members of the community, but many may not embark upon selling / redeveloping their land in their lifetime.
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Net Increase in value after public investments

and externalities, thereof
Implicit value of land
Value without public

investments around the land
Time
Figure 2: Diagrammatic Presentation of the Concept of VCF

1.2 OBJECTIVE OF STUDY
The key objectives for this study is to conceptualize and develop a framework (including procedural, legal and
institutional aspects) to generate revenue through VCF tools for Rajnandgaon, so as to effectively capture the
additional land/ property value generated through public investments made as part of the implementation of the
AMRUT.
1.3 SCOPE OF THE ASSIGNMENT
The scope of the assignment covers:
1) Study of the MoUD report on land based fiscal tools and other reports.
2) Assessment of the existing VCF tools in the State and identification of areas where VCF can be applied in
following scenarios:
a) Coverage: Extending existing value capture tool from other parts of the State to the projects covered
under AMRUT.
b) Maximize Revenues: By changing existing rate structure in value capture tools of the State to enhance
revenues.
c) Scope: Compare with other States/Countries. Examine their relevance and appropriateness to the
State.
• Apply minimal changes to existing VCF methods leading to big increase in revenues;
• Identify new VCF tools leading to large revenue enhancement in the State in short term and long
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term.
• Provide any other suggestions for effective use of VCF Tools
3) For each of the selected methods technical assistance is to be provided to customize the VCF methods for
the State and its Urban Local Bodies (ULBs). This will include preparation of legal/executive orders,
amendments to regulations/rules, contract agreement etc. to enable quick roll-out of VCF methods.
4) For each of these suggested VCF tools, a Cost Benefit Analysis will be provided. The analysis would give
existing status, potential value, efficiency, equity, adequacy, manageability, legal feasibility, timelines (short,
medium, long) and general remarks
5) For each of these suggested VCF tools, draft contract agreements, draft government orders etc. for
implementing the proposed VCF tools will be developed.
6) For each of the suggested VCF tools, a standard contractual agreement/Memorandum of understanding
will be developed between the State, ULB and parastatals involved in order to have stability in revenue
sharing arrangements.
7) The Consulting Firm will also broadly study projects/modules/packages in the Smart City Proposals and
recommend most appropriate VCF method(s) for the project which may be incorporated in the Detailed
Project Reports and Financial Operation Plan of that project by the Smart City SPV.
8) For each of the suggested VCF tools, handholding support will be provided for implementation of the
interventions, and also support will be rendered in implementing changes in laws, government orders, bye
laws, etc.
1.4 NEED OF VCF FOR RAJNANDGAON
The total revenue and expenditure of Municipal Corporation Rajnandgaon (MCR) for the FY 2015-16 was Rs.
26.94 crore and Rs. 38.41 crore (depreciation of Rs. 19.02 not taken into account) respectively, while the
revenue and expenditure figure for FY 2014-15 was Rs. 25.64 crore and Rs. 28.57 crore (depreciation of Rs.
19.67 not taken into account) respectively. Municipal Corporation Rajnandgaon had registered negative income
over expenditure of (-) Rs. 11.47 crore in 2015-16 and (-) Rs. 2.93 crore in 2014-15. Analysis of last three
financial years shows continuous loss in all the three FYs.
Since 2015, infrastructure components such as water supply, sewerage and development of parks & green
spaces are being implemented under AMRUT with a budgetary provision of Rs. 241.68 crore out of which Rs.
48.33 crore are to be funded by the ULB. To keep up with the ever increasing financial pressure towards
provision and maintenance of urban infrastructure the ULB has to depend on either grants or look for avenues for
alternate sources of income. This necessitates development of Value Capture Financing Framework so that
dependence of ULB on grants can be reduced.
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The Government of Chhattisgarh will develop Rajnandgaon, Bhilai and Korba as Smart Cities on their own with a
budget allocation of Rs 3,908 crore. The total projected cost for the Smart City Proposal (SCP) for Rajnandgaon
which includes both the Area Based Development Plan and the Pan-City Plan is INR 1974.49 crores. The
CAPEX of the projects envisaged under this proposal shall be financed/developed from the following three
sources:
• Smart City Fund : INR 279.68 crore
• Convergence Fund : INR 234.67 crore
• PPP : INR 1460.14 crore
The O&M cost of the projects developed under SCP shall be financed through following sources:
• Own Sources of Revenues of SPV; and
• Incurred by the Private Partners during concessionaire period.
In order to fund the AMRUT and Smart City Area Based and PAN City projects and to carry out other functions,
the ULB has to scout for avenues for alternate sources of income to meet the demand for the infrastructure. This
necessitates development of Value Capture Financing Framework so that dependence of ULB on grants can be
reduced.
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CHAPTER 2:
VALUE CAPTURE FINANCE TOOLS
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2 VCF TOOLS
Ministry of Housing & Urban Affairs, (formerly Ministry of Urban Development), Government of India under the
aegis of Capacity Building for Urban Development (CBUD) Project - A partnership program between Ministry of
Urban Development, Government of India & The World Bank released a Report on Land Based Fiscal Tools
(LBFTs) and Practices for Generating Additional Financial Resources in August 2013. The report examines the
LBFTs being used in different states in India and also in other countries. The report further proposes an LBFT
that could be devolved to ULBs to augment their revenue.
Government of India announced its first draft policy framework on VCF in July 2016, and revised policy
framework in June 2017. The VCF policy framework has been developed as an essential document to inform
States and Union Territories with concepts and key idea behind introducing VCF mechanisms at the local level to
enhance financial strength, and thereby provide better infrastructure. Two key points summarize the rationale for
the VCF policy for India – (1) direct sale of land to raise funds, which is prevalent in many urban areas in the
country, has been observed to be a less efficient way of value capture; (2) there are many value capture
instruments in India however, these are not applied comprehensively across ULBs and as a result, value
realization potential is not maximized.
2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA
Value capture is based on the principle that private land and buildings benefit from public investments in
infrastructure and policy decisions of governments. Appropriate VCF tools can be deployed to capture part of the
increment in value of land and buildings. In turn, these can be used to fund projects being set up for the public by
the central/state governments and ULBs. This generates a virtuous cycle in which value is created, realized and
captured, and used again for project investment. Various VCF instruments are practiced across the world. Some
of them are also in practice across different states of India.
Ministry of Housing & Urban Affairs, Government of India in their VCF Framework has identified the following
LBFTs tools:
2.1.1 Land Value Tax
Land Value Tax (LVT) is a tax whose amount is based on the value of property. A land value tax is a progressive
tax, in which the heaviest tax burden fall on the owners of valuable land. Land Value Tax is considered the most
ideal Value Capture tool which apart from capturing any value increment, helps stabilize property prices,
discourage speculative investments and it does not cause economic inefficiency, and also tends to
reduce inequality.
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In India, land value tax is levied by Tamil Nadu and Maharashtra. It is used for capturing value increment of the
land, other than agricultural land. In Tamil Nadu, the tax has a legal backing from the Tamil Nadu Urban Land
Tax Act, 1966. Under this Act all the urban lands were assessed to urban land tax, at a flat rate of 0.4 per cent
on the market value of each urban land. This market value of each urban land is determined, with reference to
the sales statistics of the land in and around the area where the urban land under reference is located. This Act
provided for the Valuation of each Urban Land for the purpose of Urban Land Tax.
Significant variations are observed over the rate structure provisions in different states. Some statutes stipulate
the maximum and/or minimum of the rates of the tax, as percentage of the annual rental. Where as in some
other cases no limit is indicated. Under the Bihar and Orrisa Municipalities Act, 1992, the maximum ceiling on the
rates of tax are fixed at 12.5 per cent of the annual rental value. The Himachal Pradesh Municipal Act, 1968
limits the rate of general tax on buildings and land to 12.5 percent. The Karnataka Municipal Act, 1964, while
fixing the maximum ceilings on the rates of component taxes has also fixed the minimum limit on the rate of the
aggregate of all those taxes. In Karnataka the maximum limits for the tax on buildings and land is 10 percent.
Under Kerala Municipal Act, 1960, the minimum limits on general purposes tax is fixed at 5 per cent. The M.P.
Municipal Act, 1961, fixed the maximum and minimum rates of general purpose tax at 12.5 and 5 percent of the
annual value. In the case of Haryana Municipal Act, 1973, where only a general tax on buildings and lands is
allowed, the maximum and minimum in respect of it are fixed respectively at 15 and 7.5 percent. Similar is the
provision under Punjab municipal Act, 1911.
Globally, land value tax is widely used in Denmark, Australia, and New Zealand. In New South Wales, the state
land tax exempts farmland and principal residences and there is a tax threshold. Determination of land value for
tax purposes is the responsibility of the Valuer-General. In Victoria, the land tax threshold is $250,000 on the
total value of all Victorian property owned by a person as at 31 December of each year, and taxed at a
progressive rate. In Tasmania the threshold is $25,000 and the audit date is 1 July every year. Properties with
value between $25,000 and $350,000 are taxed at 0.55% and over $350,000 they are taxed at 1.5%. Denmark,
taxes the base value of the land according to either (a) the total value of the property minus the value of
improvements; or (b) the value of the property last tax year, altered by a growth/decline percentage. Whichever
of those two assessments is lower results in the base land value. This base land value is taxed at between 1.6%
and 3.4%.
2.1.2 Development Charges (Impact Fee)
Development Charges (Impact Fee) is imposed by a local government on a new or

proposed development project to pay for all or a portion of the costs of providing public services to the new
development. Impact fees are considered to be a charge on new development to help fund and pay for the
construction or needed expansion of offsite capital improvements. Development charges (Impact fee) are area
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based and link the development charge to the market value of land by carrying out periodic revisions.
States like Andhra Pradesh, Gujarat, Maharashtra, Tamil Nadu and Madhya Pradesh levy Impact Fee and collect
it upfront while granting development permissions. In Hyderabad, the Impact Fee is charged based on the width
of the road abutting the property and it varies from Rs. 200/- to Rs. 400 per sq ft on total built up area. It is legally
backed by Andhra Pradesh Urban Areas (Development) Act, 1975 and under Special Development Regulations.
Development charges are levied in Punjab, backed by Punjab Municipal Corporation Act, 1976
Impact fee was introduced in USA in the year 1970 and became increasingly popular by the 1980s. The rise of
impact fees in the USA may be attributed to shrinking federal funding to the states and local governments,
increasing suburbanization, difficulties faced by the government in meeting the demands for new services, and
reluctance of existing taxpayers to contribute to providing services to new development through property taxes.
The American Planning Association (1997) issued policy guidelines for the use of impact fees. The guidelines
expressly state that impact fees are levied to finance only the new infrastructure services related to the needs of
new development; they cannot be used to fund any infrastructure backlog or for the operation and maintenance
of infrastructure services.
2.1.3 Betterment Levy
Betterment levy is a one-time upfront charge on the land value gain because of public infrastructure investments.
It could be as a result of area or project based intervention. It is considered the most direct form of value capture.
Whereas development charges (impact fees) work from the cost side of budgets, betterment levies try to capture
part of the infrastructure investment already incurred by the government.
In India, the Mumbai Metropolitan Regional Development Authority (MMRDA) Act, 1974 provides for levying
betterment charges for specific projects. The Hyderabad Municipal Corporation Act, 1955 originally provided for
the levy of betterment charges to meet the costs of internal infrastructure and services in the case of
development projects. In the late nineties, the Government of Andhra Pradesh amended the Act to enhance the
scope of such levy to include external betterment. Uttar Pradesh has provision of imposing betterment levy in
Uttar Pradesh Urban Planning & Development Act, 1973. Ghaziabad is already imposing betterment levy on
approvals along the 500m buffer of the metro line. Gujarat levies betterment fees under all town planning
schemes. Bengaluru levies betterment fees on properties registering under the Bruhat Bengaluru Mahanagara
Palike (BBMP) region.
Internationally, the UK imposes betterment levy equal to 40% of the land value gain attributed to public
investments. In United States, the betterment levy or special assessment is a compulsory charge imposed by a
government on the owners of a selected group of properties to defray, in whole or in part, the cost of a specific
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improvement or services that is presumed to be of general benefit to the public and of special benefit to the
owners of such properties. In Colombia this levy, called Contribución de Valorización (CV), has been collected
since 1921.
2.1.4 Vacant Land Tax
Vacant land tax is levied annually until the building is constructed on the plot. It is applicable on those
landowners who have not yet initiated construction on their lands. It is an area-based intervention. The objective
to levy the tax is to discourage owners to keep the land vacant in urban areas and to prevent hoarding.
The Greater Hyderabad Municipal Corporation (GHMC) under the Hyderabad Municipal Corporation Act, 1987
imposes an annual tax of 0.5% of the registration value of the land if not used exclusively for agriculture purpose
or is vacant without a building. In Tamil Nadu, vacant land tax is charged under provisions of Tamil Nadu District
Municipalities Act, 1920 and it varies from Rs. 0.20 to 0.60 per sq. ft. depending on the location of the plot. The
Karnataka Municipalities (Amendment) Ordinance, 2003, provides for tax on vacant land measuring not above
one thousand square meters, at not less than 0.1 per cent and not more than 0.2 per cent of taxable capital
value of land; tax on vacant land measuring above one thousand square meters but not above four thousand
square meters at not less than 0.025 per cent and not more than 0.05 of taxable capital value of land; and tax on
vacant land measuring above four thousand square meters at not less than 0.01 per cent and not more than 0.02
per cent of taxable capital value of land. In Delhi the Vacant Land Tax on residential properties is charged at 7%
to 12% of the annual ratable value.
Internationally, Bolivia levies a surcharge of 2 percent on the ideal land that has access to public utilities and 1
percent on the ideal land that does not have access, above the basic rate of 0.4 percent of market value. In
Honduras, the basic property tax rate is 0.5 percent, but the vacant land is subject to a 1 percent rate.
2.1.5 Fee for Changing Land Use
Fees for changing land use is levied once by the Development Authority/Town & Country Planning Department
at the time of giving permission for change of land use. Development Control Regulations/ Building Bye-Laws
provides for procedure to obtain permission for change of land use. It as an area based intervention.
Almost all states in India have such provisions in their Town and Country Planning Acts e.g. in Punjab,
Maharashtra and Andhra Pradesh the change of land use is backed by Punjab Regional & Town Planning &
Development Act, 1995; Maharashtra Regional Town Planning Act, 1966; and Andhra Pradesh Urban Area
(Development) Act, 1975 respectively.
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Internationally United Kingdom, France, Singapore, China and many other countries permit change of land use
against a charge/ fee by following a process.
2.1.6 Transfer of Development Rights (TDR)
Transfer of Development Rights (TDR) is a process of making available certain amount of additional built up area
in lieu of the area relinquished or surrendered by the owner of the land, so that the owner can use the extra built
up area either for himself or transfer it to another in need of the extra built up area for an agreed sum of money. It
is an area/project-based intervention, and is levied one-time while taking permission for TDR. It is used for
trading development rights. TDR is granted only for prospective development and not for past developments.
The essential elements for success of TDR are (a) demand for bonus development in the receiving area; (b)
receiving areas customized for the community; (c) strict sending area development regulations; (d) few or no
alternatives to TDRs for achieving additional development; (e) market incentives; (f) ensuring use of TDRs; (g)
TDRs banks; etc.
Maharashtra, Karnataka and Gujarat have enabling laws for using TDRs for developing open spaces, promoting
affordable housing, etc. Ahmedabad uses TDRs for preservation of heritage open spaces or cultural resources,
and is a way to compensate property owners for loss in revenue on their properties. In Mumbai, it is used for
slum rehabilitation schemes, where a minimum of 70% of eligible slum dwellers in a pocket have come together
to form a cooperative housing society for implementing the scheme. It is backed by the development control
regulation (DCR) norms of the area.
The concept of transferring development rights between properties was first introduced in New York City with the
passage of the first American Zoning Ordinance in 1916. In a rural/regional setting, the South Australian
Government introduced TDRs in the Mount Lofty Ranges near Adelaide in 1992. The scheme proposed to allow
the transfer of development rights from a water protection area where existing zoning did not allow additional
housing and land subdivision, to areas more appropriate for urban expansion and infrastructure provision. It was
abandoned and generally considered a failure. A key reason for the failure was that planning authorities did not
identify and resolve clear sending and receiving areas (Industry Commission 1998, Williams 2004). TDRs, and/or
instruments with similar features, have also been used in more urban settings to preserve heritage buildings in
Adelaide, Brisbane, Melbourne and Sydney. The owners of historic buildings can transfer unused development
rights from a heritage site to a development site, which can then be developed to greater intensity than would
otherwise be allowed. The owner of the heritage site then enters a binding agreement with the relevant planning
authority to preserve the heritage building. They also receive compensation for the loss of development rights
that can facilitate the refurbishment and rehabilitation of historic buildings. Additionally, TDRs have been
introduced for urban growth management objectives in Wellington Shire in New South Wales, and open space
conservation on the New South Wales central coast and south coast.
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2.1.7 Premium on Additional FSI/FAR
Premium on additional FSI/FAR is one-time charge levied to provide permission for using additional FSI/FAR
beyond permissible limits on any parcel of land. It is a project-based intervention. Often such developments are
justified by infrastructure augmentation resulting in higher carrying capacity of the neighborhood. Transit
oriented development policies often permit denser development along the augmented transport corridors. Such
high density development relaxations are supported by purchasable FARs
More and more States are coming with the policy of saleable FSI/FAR. It is widely used in Maharashtra,
Karnataka, Gujarat and Tamil Nadu to allow for additional development rights beyond the permissible limits in the
state town planning laws and regulations. Nagpur Municipal Corporation (NMC) has adopted a policy of
increasing FSI/FAR by 0.3 by paying premium to it. The premium will be charged at the rate of 60% of ready
reckoner value for residential constructions and at the rate of 90% for commercial constructions. Half of the
premium collected by NMC will go to the state government. This policy is only applicable for non-congested
areas.
New Delhi, Nagpur, Pune, Ahmedabad, Faridabad are amongst some of the cities where Transit Oriented
Development Policies have been notified.
Internationally sale of additional FAR is an important value capture tool in Brazil and France. The French land-
use policy restricts landowner’s building right to a low baseline FAR and additional FAR has to be purchased.
2.1.8 Land Pooling System
Land pooling system is a form of land procurement where all land parcels in an area are pooled, converted into a
layout, infrastructure developed, and a share of the land, in proportion to original ownership, returned as
reconstituted parcels. It is an area-based intervention and is used one-time for planned development purposes.
The land owners contribute their land voluntarily and are made stakeholders in the process of the development.
In India, Gujarat and Haryana have used land assembly programmes, where the owners agree to exchange their
barren lands for infrastructure-serviced smaller plots. Gujarat has used these tools to guide the development of
Ahmedabad city and its surrounding infrastructure. Andhra Pradesh has used it to acquire land for Amravati, its
new capital city. In view of the challenges faced for land acquisition and development, more and more states in
India are coming up with the policy of Land Pooling. The usual ratio of land acquired to land returned in Gujarat
is 40:60, with the landowner getting back 60% of land. The ratio in Amaravati is closer to 70:30, with the
landowner getting back only 30% of land. Delhi also introduced the land pooling policy in the year 2017.
Internationally, it is a common feature in Germany and Japan.
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2.1.9 Land Acquisition and Development
Land acquisition refers to the process by which the Union or a State Government acquires private land for the
purpose of development of infrastructure facilities or urbanization of the private land, and provides compensation
to the affected land owners and address their need for resettlement and rehabilitation. It is an area-based
intervention, and is used one-time for acquisition and developing the land.
Land acquisition in India is governed by the Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013 (LARR) and which came into force from 1 January 2014. This Act
superseded the Land Acquisition Act of 1894. In view of the challenges faced in acquisition of land due to high
initial costs, resistance from the land owners, displacement of host community, etc., land acquisition has paved
way to land pooling mechanism.
2.1.10 Tax Incremental Financing (TIF)
In Tax Increment Financing (TIF), the incremental revenue from future increase in property tax or a surcharge on
existing property tax rate is ring-fenced for a defined period to finance new investments in the designated area. It
is a project-based intervention, and is levied annually for a fixed period of time.
In India, Hyderabad has used TIF for funding the development in 800 peripheral neighbourhoods under the
purview of Hyderabad Municipal Corporation Act, 1987.
Internationally, thousands of TIF districts currently operate nationwide in the U.S. With the exception of Arizona,
every state and the District of Columbia has enabled legislation for tax increment financing. Some states, such
as Illinois, have used TIF for decades, but others have only recently embraced TIF.
Summary of provision of Standard VCF Tools in various states in India is presented in Table 2-1.
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Table 2-1: - Summary of Provision of Standard VCF Tools in various States in India
State Urban Land Conversion Betterment Development TDR Sellable FSI Vacant Land TP Scheme
Tax Charges Levy Charges/ Tax
Impact Fee
Andhra Pradesh √ √ √ √ Φ Φ √ √
Arunachal Φ √ √ √ Φ Φ Φ Φ
Assam √ √ √ Φ Φ Φ Φ Φ
Bihar Φ √ √ √ Φ Φ √ Φ
Chhattisgarh Φ Φ √ √ Φ Φ √ √
Goa √ √ √ √ Φ Φ Φ √
Gujarat √ √ √ √ √ √ Φ √
Haryana Φ √ √ √ Φ Φ Φ Φ
Himachal Φ Φ Φ √ Φ Φ √ Φ
Karnataka √ √ √ √ √ √ Φ √
Kerala Φ √ √ √ √ √ Φ √
Madhya Pradesh Φ Φ √ √ Φ Φ Φ √
Maharashtra √ √ √ √ √ √ √ √
Meghalaya Φ Φ √ Φ √ Φ √ Φ
Mizoram Φ √ √ √ √ Φ √ Φ
Nagaland Φ Φ √ √ Φ Φ Φ √
Orissa Φ Φ √ √ √ √ Φ √
Punjab Φ √ √ √ Φ √ Φ √
Rajasthan √ √ Φ √ √ √ √ √
Sikkim Φ Φ Φ √ Φ Φ Φ Φ
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Final Report
State Urban Land Conversion Betterment Development TDR Sellable FSI Vacant Land TP Scheme
Tax Charges Levy Charges/ Tax
Impact Fee
Tamil Nadu √ √ √ √ √ √ √ √
Tripura Φ √ Φ √ Φ Φ √ Φ
Uttar Pradesh Φ √ √ √ √ √ Φ Φ
Uttarakhand Φ √ √ √ Φ Φ √ Φ
West Bengal √ √ Φ √ √ √ Φ Φ
√ Provision Exists: Φ No Clear Provision
Source: Value Capture Financing Policy Framework, Ministry of Urban Development, Government of India, February 2017
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Draft Report 2
Technical Assistance in Generating Revenue through Value Capture Financing Tools for Chandigarh
2.2 ADDITIONAL LAND BASED FISCAL TOOLS IN INDIA
Apart from the tools mentioned in the previous section, ULBs have been using other methods to capture value from
the land. Some of them are:
2.2.1 Regularization of Unauthorized Development
Supply of affordable housing in Indian cities is a very big challenge and the resultant is upsurge of unauthorized
developments in all the ULBs. The ULBs / Development Authorities from time to time under socio-political pressures
have been regularizing these unauthorized developments making them integral part of the planning. This results in
manifold increase of land/property values which in most the cases is not captured and remains with the private
owners.
Many of the Indian States have legal backing in form of Acts for regularization of unauthorized development. Some
of the examples are: Gujarat Regularization of Unauthorized Development Act, 2011; Guidelines for regularization of
unauthorized development in Delhi, 2007 prepared by Ministry of Urban Development, Government of India; The
Regularization of Unauthorized Developments in the City of Ulhasnagar Act, 2006; The Chhattisgarh Regularization
of Unauthorized Development Act, 2002; Tamil Nadu Town and Country Planning Act,1971; etc.
2.2.2 Property Development for Leasing
Most of the Urban Local Bodies / Development Authorities in India hold some land bank. This land either have
government offices or residences for government employees or utilities/ facilities or are used for generating revenues
through leasing or out-right sale. The utilization of land however in all the cases is not optimum.
Traditionally, States/ULBs have relied on direct sale of lands to raise funds, which is a less efficient form of resource
mobilization, as compared to value capture. The State/ULB should shift their paradigm to property development
linked short-term leases on such properties, rather than out-right sale or perpetual lease to ensure that they keep on
harvesting the benefits of value capture on the land for which they have invested in creating the infrastructure.
2.2.3 Charging Extra Stamp Duty
Stamp duty is charged by the revenue department on all property transactions. A surcharge on stamp duty is often
utilized by the government to finance major infrastructure developments in a city. This is an effective value capture
tool as it is linked to market value of the property. Also the tool is used when a property owner exercises the sale
option of the property, thus realizing the gains on property price appreciation.
Government of Maharashtra has implemented a 1% surcharge on all property transactions within the Nagpur
Municipal Corporation limits to fund Nagpur Metro Development. Money so collected are shared between Nagpur
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Final Report
Municipal Corporation and Nagpur Metro Development Authority, and are redeployed for infrastructure augmentation
in the city.
2.2.4 Purchasable Development Control Regulations
Enforcement of rigid building control regulations has traditionally been a weak link with ULBs. Building violations are
rampant across the country. The nature of these violations vary on criticality from lower scale involving balcony /
terrace coverage, construction in set-backs, to highly critical ones involving encroachments. The less critical
construction violations are often regularized / compounded after collection of a fee. Such regularization is usually
allowed after the construction has been completed.
Often some development control regulations are considered relaxable, and hence are quite common. Such
development control deviations can also be made into purchasable development control relaxations. Since such
relaxations come with benefits to property owners, they can also be charged linked with the value increments
involved. Examples of some such chargeable relaxations include:
1. Relaxation on density norms, while maintaining the FSI. Such relaxations facilitate a developer to construct
smaller units resulting in greater efficiency of his product design.
2. Greater ground coverage for retail property developments. The resultant higher floor plate significantly
improves the value of retail development.
3. Balcony / terrace coverage, setback relaxations, and many other similar relaxations can also be made
chargeable
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Final Report
CHAPTER 3 :
CITY PROFILE
35
Final Report
3 CITY PROFILE
Rajnandgaon was ruled by a several great dynasties like Somvanshis, Kalchuries and Marathas. The rich legacy is
often reflected in the palaces, streets and historical remains in the district. However, the power shifted from the
native Mahant rulers to British over the period of time. Post-independence, Rajnadgaon was included as a Princely
State, which in 1948 was merged into Durg District of Madhya Pradesh. However, in 1973 the government made
Rajnadgaon District headquarters. Finally, the present day district was carved out in 1998 as the new state of
Chhattisgarh was formed. Due to its strategic location, the city shares its boundary with two states - Madhya
Pradesh, Maharashtra and is often known as the “Gateway Town of Chhattisgarh”.
In terms of location, the city lies on 21.100 North latitude and 81.030’ East longitude and is spread across an area of
76.05 sq km (area within Municipal Corporation). It is bounded by Kabeerdham district on the North, Madhya
Pradesh and Maharashtra State on the West, Uttar Bastar Kanker district on the South-East, Durg on the East.
The city is well connected to the rest of country through road and rail network. NH-6 (Great Eastern Road) passes
through the city. Rajnadgaon station is on the Mumbai-Howrah line of the South Eastern Railways. The nearest
airport is at Raipur at about 80 km distance.
Figure 3 gives an illustration of regional setting of Rajnandgaon while the map showing planning boundaries of
Rajnandgaon is presented as Figure 4.
.
3.1 DEMOGRAPHIC PROFILE
The area under Municipal Corporation Rajnandgaon is 76.05 sqkm which is divided in 45 wards. It houses a total
population of 163114 (as per Census 2011) with 81929 (50.23%) males and 81185 (49.77%) females. The decadal
growth rate during 2001 – 2011 has been around 14%. The population growth of Rajnandgaon during 1971 to 2011
is presented in Figure 5. The sex ratio within the city works out to 991 which is same as the sex ratio of the
Chhattisgarh State. Child population (0-6 age group) in the municipal limits stood at 18930 in 2011 constituting about
11.60% of the population. The total share of Schedule Caste (SC) and Schedule Tribe (ST) population within MCR
limits is 12.69 per cent and 5.73 per cent respectively. The city has 35218 households and the average household
size works out to 4.63. The gross population density works out 2145 persons per sq. km. The average literacy rate of
86.83 per cent within municipal limits is higher than the literacy rate in the country (74.04%).
The ward map of Rajnadgaon is presented as Figure 6 and the ward-wise population based on Census 2011 is
presented in Table 3-1.
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Final Report
Figure 3 : Regional Setting of Rajnandgaon
Source: Census India 2011
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Final Report
Figure 4 : Planning Boundaries of Rajnandgaon
Figure 5 : Population Growth of Rajnadgaon from 1971 to 2011

Source: Census India 2011
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Final Report
Figure 6: Ward Map of Rajnandgaon

Source: Development Plan Rajnandgaon
Table 3-1: Ward-wise Population of Municipal Corporation Rajnandgaon
Ward No. Ward-wise Ward-wise Ward No. Ward-wise Ward-wise

Population Households Population Households
1 4841 1008 23 2750 522

2 2675 600 24 1637 289
3 5923 1325 25 1993 417
4 5219 1188 26 2798 563
5 4676 1071 27 4861 1004
6 4061 894 28 4007 867
7 5278 1234 29 7504 1648
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Ward No. Ward-wise Ward-wise Ward No. Ward-wise Ward-wise

Population Households Population Households
8 2216 508 30 2165 456

9 1557 325 31 2158 452
10 2065 462 32 1842 329
11 2593 571 33 2667 544
12 5297 1197 34 1168 234
13 1095 257 35 2422 487
14 2695 630 36 1354 287
15 3309 746 37 3870 783
16 5731 1290 38 6837 1509
17 5746 1227 39 5854 1305
18 4653 983 40 3815 818
19 5137 1133 41 4936 1060
20 2356 425 42 4684 981
21 1897 426 43 5654 1265
22 1927 413 44 4230 901
23 2750 522 45 2961 584
TOTAL 163114 35218
Source: Census of India, 2011
3.2 CITY GROWTH
Rajnadgaon had experienced a rapid rate of growth over the period of time as compared to other cities. The
spatial urban growth dynamics reveals the occurrence and spatial distribution of the urban spatial growth mainly in
the duration before 1991 from the initial setup of transit corridor of rail and road which further extended higher in the
later stage during 1991-2001and 2001-2011. Figure 7 reveals that there is a continuous increase in contiguous built
up around the core city area along the transit corridors especially the national and state linkages. The spatial growth
of the city in the recent times (last two decades) has been along the major road network corridors in the different
directions towards north as well as south on both sides of the rail corridor. The planning and development of
Rajnandgaon city is governed by Rajnandgaon Development Plan 2031.
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Figure 7 : Spatial growth map of Rajnadgaon
3.3 ECONOMIC PROFILE
The work force participation rate in Rajnandgaon is 42.42 per cent (total workers 61161). Of this, about 57,205 (93.5
per cent) are main workers, while the remaining 3,956 (6.5 per cent) are marginal workers. Sector-wise bifurcation of
main workers reveals that 89 per cent are employed as Other Workers (employed other than cultivator, agricultural
worker or household industry worker), which includes government servants, factory workers, those engaged in trade,
commerce, business, transport, banking, mining, construction, etc. A sector-wise bifurcation of work-force is given in
Figure 8.
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Final Report
Figure 8 : Distribution of Workers in Rajnandgaon
Source: Census of India, 2011
Rajnadgaon is known for its agro-based, readymade garments, wooden furniture, mineral based and metal based
industries. It has three large scale manufacturing units including one steel plant and two chemical plants, along with
11 medium scale enterprises involved in manufacturing of flour, forgings, metal, etc. During the past 25 years or so,
the micro and small scale industries have grown significantly in the city with the number increasing from 881 in 1984-
85 to 7055 in 0215-16. This has also led to manifold increase in the number of people employed in the sector (refer
figure 9).
Figure 9: YOY increased in number of Industries vis-a-vi increase in the employment

Source: DIC Rajnandgaon
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3.4 REAL ESTATE
The fundamental characteristic of urban land markets is that land is more expensive at better locations. The
locational advantages are more often man-made, such as distance to employment centres, access to better urban
amenities etc. Analyses of Rajnadgaon land DLC rate as well as market rates reveal that it is having varied
emphasis and focal points. Land price map (Refer figure 10) reveal peak values closer to the city core/ centre, Major
transit nodes, and institutional areas with a gradual reduction in land values as we move towards the periphery of the
city. Moreover, the land prices as per the DLC rate for year 2016-17 have been identified by the various planned
colonies of the city having better connectivity with infrastructural facility. These colonies have support of commercial
as well as institutional support ranging the applicable DLC prices higher.
Source: District Revenue Office

Figure 10 : DLC land rate for Rajnadgaon
From the above figure no 10 it clearly reflects that the greatest impact is likely to be found closest to the public
transport node. The distance thresholds are different for residential and commercial developments, with impact
distances being larger for the residential than for commercial. Secondly, the impacts may be different on existing
developments as compared with new Kamptee Line– 86100 Rs / square meter, Old Bust stand area- 42000 Rs /
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Final Report
square meter, Post Office Chowk- 61000 Rs / square meter etc. whereas city peripherals such as Shankar Nagar,
Motipur, Chikhali Talab are observed to have value ranges of 2500 to 3600 Rs / square meter.
3.5 RESIDENTIAL AND COMMERCIAL DEVELOPMENTS
There are 39240 residential and 2419 commercial properties within the municipal area. Ward no. 39 has the highest
number of residential properties while maximum numbers of shops are in Ward 40. Ward-wise number of registered
residential and commercial properties in Rajnadgaon is given in Table 3-2 below.
Table 3-2 :Ward-wise Distribution of Residential and Commercial Properties in Rajnandgaon

Ward No. Residential Commercial Ward No. Residential Commercial
Properties Properties Properties Properties
1 1272 46 24 351 10
2 576 13 25 314 4
3 744 68 26 697 18
4 1092 20 27 1539 73
5 939 26 28 957 8
6 808 63 29 1427 15
7 1106 30 30 485 69
8 100 7 31 454 341
9 336 25 32 772 63
10 461 22 33 0 0
11 0 - 34 232 39
12 0 - 35 479 25
13 213 164 36 288 29
14 645 49 37 871 93
15 813 107 38 1484 65
16 1123 64 39 2106 119
17 1268 50 40 928 453
18 1160 16 41 1129 39
19 1260 119 42 887 49
20 407 8 43 827 16
21 373 26 44 910 27
22 0 - 45 720 17
23 387 24 TOTAL 39240 2519
Source: Nagar Palika Nigam Rajnandgaon
There are 45 slums in the city out of which 32 are notified. These 45 slums houses 29204 households.
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3.6 INFRASTRUCTURE
Water Supply
The status of water supply as per Service Level Improvement Plan (SLIP) is as under:
Description Service Level
Coverage of water supply connections 53.3%
Per capita supply of water 130.12 LPCD
Extent of metering of water connections 0%
Extent of non-revenue water 29.33%
Quality of water supplied 100%
Cost recovery in water supply services 60.7%
Efficiency in collection of water supply related charges 56.33%
Source: SLIP, AMRUT
At present Municipal Corporation is taking water from Shivnath River Mohara. There are two operational water
treatment plants with capacity of 27 MLD & 10 MLD respectively. For managing the water supply the coty is divided
in 5 zones viz. Zone 1: Shankarpur; Zone 2: R.K. Nagar; Zone 3: Tankaghar & Civil Lines; Zone 4: Kanharpuri &
Indira Nagar; Zone 5: Singhdai
Sewerage
The status of sewerage as per Service Level Improvement Plan (SLIP) is as under:
Description Service Level
Coverage of latrines (individual or community) 93.7%
Coverage of sewerage network services 0%
Efficiency of collection of sewerage 0%
Efficiency in Treatment: Adequacy of sewerage treatment capacity 0%
Source: SLIP, AMRUT
18 MLD Sewage is generated in the city every day. The city does not have a sewerage system. Only 50% houses
have septic tank and from rest of the houses the sewage is discharged in open drains.
Storm Water Drainage

As of 2015, the drainage network in Rajnadgaon stands at 635 km, and development of additional 19 km of drainage
network is underway. According to the SLIP report, there is going to be a gap of 168.1 km in the drainage network by
2021.
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Green Space & Parks

There are 43 parks in the city however the total area under the parks is only 0.20 sqkm i.e. just 0.267% of the total
area of the city. The area under parks and green spaces in the city is significantly lower than the MoUD benchmark
level.
3.7 SMART CITY PROPOSAL
The vision of Rajnadgaon smart city is “To be a vibrant and innovative city, focused on sustainability, community and
economic opportunity collectively lifting the standards of livability of people.” The Smart city proposals will be funded
by the state and through Public Private Partnership (PPP) model.
Source: Smart City Proposal, Rajnandgaon

Figure 11 : SMART city intervention area in Rajnandgaon
3.7.1 Area Based Development
There are 11 key components proposed under the ABD smart city proposal. The table 3-3 gives a brief of each
component:
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Table 3-3: Project-wise details of the Area Based development interventions
Particulars Details
Smart Infrastructure • Decentralised waste water recycling plants for lake recharging
• Decentralised STP at 5 locations
• Revamped storm water system
Smart Water • 24x7 water supply with 100 per cent metered connections
Management • Hydrological information system
• Mandatory rain water harvesting
• Elimination of dependence on ground water
• Augmentation of existing water supply system and distribution network
Smart Energy • 24x7 electricity supply
• Underground electric wiring
• Solar plants and solar roof top panels
• LED street lighting
Smart Integration • Creating ATP centers
• Asset assessment for waste & water
• GIS based property database linked to other verticals
Smart Transportation • E-rickshaw rapid transit system
• Multi-modal logistics hub
• Improvement of major roads and intersections
• Development of smart parking at 10 places
Smart Redevelopment • Redevelopment of Gol Bazar area to compact mixed use development covering
an area of 18700 sqm
• Face lifting of Haat Bazar and Sadar Bazar
• Food vending zone
Smart Economy • Renting modular kiosks to informal market vendors
• Startup Center and ease of business facilitation center to be integrated with Multi-
Utility Buildings
• Food processing units at Farhad
Smart Education • Integrated E-pathshala
• Wifi hubs in all public places, schools, public & private institutes
• Exposure of students through digital libraries
• Digital literacy
Smart Recreation • Development of public open spaces with urban plaza creation
• Integrated street sections
• Provision of e-rickshaws by phasing out of autos and cycle rickshaws
Smart Identity & Culture • Hub for international sports
• Development of sports academy cum gymkhana
• Street section improvement
Smart Health & Safety • Public toilets
• NMT infrastructure
• One-touch emergency response
• E-medicine
• Space sports infrastructure
• Rent a cycle scheme
Source: Smart City Proposal, Rajnandgaon
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3.7.2 Pan City Solution
Under the pan city solution Smart City Rajnadgaon Integration Program will be taken up, wherein City wide
integration platform would be developed. The common platform would include information about various sectors
including solid waste, CCTV monitoring, power, water, transportation, emergencies, etc.
3.7.3 Costing
The total cost of Smart City proposal has been estimated at INR 1974.49 crores, of which the SCP fund would
provide INR 279.68 crores, contribution through convergence stands at INR 234.67 crores and remaining INR
1460.14 crores through PPP.
3.8 AMRUT
Rajnandgaon is projected to witness a total investment of INR 241.68 crores under the AMRUT mission.
Figure 12 : City-wise investment under AMRUT during 2015-2020

Source: State Annual Action Plan 2017-2020
In terms of sector, the maximum allotment has been done to water projects (approximately 92.5 per cent), followed
by sewerage and open space projects. Sector-wise allotments of funds under AMRUT for a period of 2015-2020 are
given in figure 13.
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Final Report
Source: State Annual Action Plan 2017-2020

Figure 13 : Sector-wise investment in Rajnandgaon under AMRUT
While centre and state do contribute in funding of the project, ULBs also have to bring in their own funds (20 per cent
in this case).
3.9 MUNICIPAL PROPERTIES
Municipal Corporation Rajnandgaon has several municipal properties/shops/land blocks that have been
rented/allocated to various users. Details of immovable properties owned by MCR are shown in table 3-4.
Table 3-4 : Details of immovable properties in MCR

Description Numbers Description Numbers
Residences 822 Gardens/ Parks 29
Bhawans 205 Dispensary 3
Manch 74 Land Parcel 4
Shopping Complex 51 Auditorium 1
Anganwadi Bhawan 43 Waiting Hall 1
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Description Numbers Description Numbers

Maidan 35 Hat Bazar 1
Community halls 32 Mini Stadium 1
Schools 23 Transport Nagar 1
Shaka Bhawan 22
Source : Municipal Corporation, Rajandgaon
The details of properties leased by MCR are shown in table 3-5.

Table 3-5 : Details of the leased properties under MCR
Total Area Average Area Present
Description No. of Shops under Shops under each Shop Monthly Rent
(in sqft) (in sqft) (in Rs.)
Shops at Bus Stand 29 (varying sizes) 396.2 12.9 1974
Shops at Haat Bazar 20 shops 360.0 18 2467
Shops at Haat Bazar 18 fruit shops 190.1 10.56 600
Shops at Haat Bazar 144 chabutra 760.3 5.28 300
Commercial Complex in Hira 17 shops (varying
384.1 32.9 7910
Moti Ward sizes)
Commercial Complex on Nandui 46 shops (varying
581.2 13.44 3675
Road sizes)
Bhawan at Delhi Gate Complex 12 481.8 36.72 10521
Pyarelal Shopping Complex 20 shops (varying
274.1 14.96 2010
sizes)
22 shops (Promoter
Gol Bazar Shopping Complex 392.6 16.4 726
Builder model)
24 shops (3.0 x 3.0)
Shopping Complex behind (Promoter Builder
297 9 789
Sarvedas School model)
25 Gumti (1.8 x 1.8)
Shops on South of Town Hall 38 shops 423.8 11.15 1021
Shops on East of Town Hall 18 shops 321.2 17.84 1021
Commercial Complex in front of
7 shops 145.5 20.79 5500
Putri Shala
Bhawan at Putri Shala Shopping
9 shops 187.1 20.79 1021
Complex
Shops near Gudakhu Line
13 shops 120.8 9.29 790
Dispensary
Shops near Gayatri Mandir 2 shops 26.8 13.38 633
Shops near Bharkapara
8 shops 107.1 13.38 665
Tankapara
50 shops (varying
Bhawan in front of Tankaghar 631.2 13.50 2575
sizes)
Bhawan in front of Tankaghar 20 shops 334.6 16.73 1010
Tankaghar Shopping Complex 31 shops 561.8 18.12 1010
Bhawan at Purani Ganj Mandi 6 shops (pratistha
35.7 5.95 305
Complex yojana)
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Total Area Average Area Present

Description No. of Shops under Shops under each Shop Monthly Rent
(in sqft) (in sqft) (in Rs.)
Bhawan at Purani Ganj Mandi
23 shops 14.50 869
Complex
Jaistambh Chowk 18 shops 401.5 22.30 995
Source: Municipal Corporation, Rajandgaon
As per details obtained from MCR, these shops are given on 10 years lease on variable monthly rentals based on
the area of the shop and its location. Urban Administration and Development Department, Government of
Chhattisgarh have issued a notification (AF 5-31/2015/18 dated 30th January, 2017) on revised guidelines for fixing
the rentals of municipal shops. The purpose of the notification is to streamline the rentals and improve the revenue
base of ULBs. The salient point of notification is as under:
1. The value of the shop is to be calculated by multiplying the Collector Rate with the area of the shop.
2. The annual rental of the shop shall be @ 2.40% of the value of the shop for Nagar Panchayats; @ 3.60% of
the value of the shop for Nagar Palika Parishad; @ 4.80% of the value of the shop for Municipal Corporation
having population up to 3 lakh; @ 6.00% of the value of the shop for Municipal Corporation having population
between 3 lakh to 5 lakh; and @ 7.20% of the value of the shop for Municipal Corporation having population
above 10 lakh.
3. The annual rent will be revised at an interval of 3 years @ 5% compounded on every revision.
4. The lease period will be 15 years and upon expiry of lease period the lease rent will increase by 25%.
This notification which is not yet enforced clearly reflects intention of State Government to make a shift from area
based system of rentals to value based system of rentals.
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Final Report
CHAPTER 4 :
EXISTING LAND BASED FISCAL TOOLS IN
RAJNANDGAON
52
Final Report
4 EXISTING LAND BASED FISCAL TOOLS IN RAJNANDGAON
This chapter analyses various land based fiscal tools with specific reference to Rajnandgaon so as to assess the
tools that can be put to use in the city so as to achieve sustainable revenue growth for the ULBs while also being fair
and equitable to the citizens and end users of property.
4.1 Financial Position of Municipal Corporation Rajnandgaon
This chapter presents the financial position of Municipal Corporation of Rajnandgaon, the existing land-based fiscal
tools (LBFTs) being used in Rajnandgaon and the corresponding legal and regulatory framework for each tool. The
objective is to have an understanding of the rate structure, revenue collection, implementation framework, etc.
The following land based fiscal tools (Taxes, Fees and Charges) are levied by various ULBs in Chhattisgarh:
(i) A tax on lands and buildings called Property Tax
(ii) Water tax
(iii) Sanitary cess
(iv) Lighting tax
(v) Fire tax
(vi) Tax on entry of goods into municipal area
(vii) Conservancy tax
(viii) Drainage tax
(ix) Profession tax
(x) Tax on vehicles and animals
(xi) Toll of vehicles and animals
(xii) Fees on the registration of cattle sold within the city
(xiii) Market dues on goods exposed for sale on government or council land.
(xiv) Betterment tax on properties whose value may have improved as a result of town planning scheme
undertaken by the Council
(xv) A tax on pilgrims
(xvi) A tax on persons occupying, houses, buildings or lands
(xvii) Toll on new bridges constructed by Council
(xviii) A tax on advertisements other than advertisements published in newspapers
(xix) A tax on theatres, theatrical performances and other shows for public amusement
(xx) A terminal tax on goods
(xxi) User charges for services
(xxii) Compounding fees in respect of the area of unauthorized construction on the basis of the rate of sale of land
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Final Report
determined by the Collector of Stamps

(xxiii) Municipal license fees and Permissions fee
(xxiv) Development fee/sanction of building plans fees
(xxv) Additional stamp duty on transfer of immovable property under section 133A of Municipal Corporation Act,
1956.
(xxvi) Compounding fee for construction made without permission
(xxvii) Registration and renewal fee for colonizers
(xxviii) Development fee from colonizers
The details of year-wise municipal income under various income heads for FY 2014-15 & FY 2015-16 for
Municipal Corporation of Rajnandgaon is given in Table 4-1.
Table 4-1: Revenue Receipts Status at a Glance – Municipal Corporation of Rajnandgaon (in INR Lakhs)
Particulars 2013-14 2014-15 2015-16
Tax Revenues 421.06 352.93 325.54
Property Tax 251.40 243.84 252.99
Water Tax 65.19 78.90 70.00
Sewerage Tax - 0.04 -
Lighting Tax - 15.74 -
Electricity Tax - 0.13 -
Others Taxes 104.47 14.28 2.55
Assigned Revenues & Compensation 336.47 403.79 809.69
Taxes & Duties Collected by others 69.56 129.09 504.22
Compensation in lieu of Taxes & Duties 266.91 274.70 305.47
Rental Income from Municipal Properties 260.67 283.74 391.33
Rent from Civic Amenities 253.29 251.88 385.11
Rent from Lease of Lands 0.87 0.05 -
Other Rents 6.50 31.81 6.23
Fees and User Charges 499.39 296.15 500.35
Empanelment & Registration Charges 210.74 16.16 44.74
Licensing Fees 87.92 97.46 137.13
Fees for Grant of Permit 12.40 8.57 17.12
Fees for Certificate or Extract 0.25 0.27 0.25
Development Charges 4.68 7.52 2.38
Regularisation Fees 30.35 6.54 21.10
Penalties and Fines 135.82 136.24 170.87
Other Fees 11.23 15.31 28.70
User Charges 3.88 5.25 75.04
Entry Fees 2.13 2.84 3.00
Rent Remission and Refunds 0.00 - -
Sale & Hire Charges 17.73 14.31 10.05
Sale of Forms & Publications 11.82 12.95 5.18
Sale of Stores & Scrap 0.01 - 0.30
Hire Charges for Equipment 5.90 1.37 4.57
Revenue Grants, Contribution, Subsidies 840.19 1,014.30 364.49
Revenue Grants 65.21 60.28 242.16
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Particulars 2013-14 2014-15 2015-16

Reimbursement of Expenses 774.98 954.02 122.34
Interest Earned 110.90 197.77 240.01
Interest from Bank Accounts 110.90 197.77 240.01
Other Income 0.28 0.96 52.77
Recovery from Employees 0.13 0.04 -
Miscellaneous Income 0.14 0.96 52.77
Total Revenue 2,486.68 2,563.94 2,694.23
The revenue receipts of Nagar Palika Nigam Rajnandgaon (Municipal Corporation Rajnandgaon) has increased from
INR 2,486.68 Lacs in 2013-14 to over INR 2,694.23 Lacs in 2015-16, registering a growth rate of 8.35 per cent.(refer
table 4-1 and figure 14)
According to the financial documents, the share of tax revenue decreased from 17 percent of total revenue in 2013-
14 to 12 percent in 2015-16. Meanwhile, Grants (Revenue Grant & Compensation of Octroi) continue to form a major
part of the revenue. Rental income from Municipal Properties shows a steady share of around 12 percent average of
the total revenue receipts. Moreover, it is observed that the urban local body has substantial bank investment which
helps to earn interest income of 9 percent of the total revenue income in 2015-16.
Rental Revenu
Assigne
Income Fees Sale of e Interest
d Sale & Recove
Tax from and Forms Sale of Grants, from Total
Revenu Hire Interest Other ry from
Revenu Municip User & Stores Contrib Bank Revenu
es & Charge Earned Income Employ
es al Charge Publicat & Scrap ution, Account e
Compe s ees
Properti s ions Subsidi s
nsation
es es
2013-14 421.06 336.47 260.67 499.39 17.73 11.82 0.01 840.19 110.90 110.90 0.28 0.13 2,486.
2014-15 352.93 403.79 283.74 296.15 14.31 12.95 - 1,014. 197.77 197.77 0.96 0.04 2,563.
2015-16 325.54 809.69 391.33 500.35 10.05 5.18 0.30 364.49 240.01 240.01 52.77 - 2,694.
Figure 14: Revenue Receipt (in Rs. Lakh) Trends for Municipal Corporation Rajnandgaon
Source: Knight Frank Research and Municipal Corporation Rajnandgaon
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The tax revenue income consists primarily from Property Tax which is around 78 percent of the total tax revenue in
2015-16. The property tax increased by 3.75 percent from 2014-15 to 2015-16. (refer figure 15)
Tax Revenue Income - Nagar Palika Nigam Rajnandgaon
Sale of Interest Recovery

Tax Sale of
Property Water Sewerag Lighting Electricity Others Forms & from from
Revenue Stores &
Tax Tax e Tax Tax Tax Taxes Publicati Bank Employe
s Scrap
ons Accounts es
2013-14 421.06 251.40 65.19 - - - 104.47 11.82 0.01 110.90 0.13
2014-15 352.93 243.84 78.90 0.04 15.74 0.13 14.28 12.95 - 197.77 0.04
2015-16 325.54 252.99 70.00 - - - 2.55 5.18 0.30 240.01 -
Figure 15: Tax Revenue Receipt (in Rs. Lakh) Trends for Municipal Corporation Rajnandgaon
The non-tax revenue income consists of rental income, fees & user charges, interest earned, and other income. The
non-tax revenue is generally being on rising trend from 2013-14 that is 35 percent to 44 percent in 2015-16. (refer
figure 16)
Non-Tax Revenue Income - Nagar Palika Nigam Rajnandgaon
Rental
Fees and Sale of Sale of Interest from
Income from Sale & Hire Interest Other
User Forms & Stores & Bank
Municipal Charges Earned Income
Charges Publications Scrap Accounts
Properties
2013-14 260.67 499.39 17.73 11.82 0.01 110.90 110.90 0.28
2014-15 283.74 296.15 14.31 12.95 - 197.77 197.77 0.96
2015-16 391.33 500.35 10.05 5.18 0.30 240.01 240.01 52.77
Figure 16: Non-Tax Revenue Receipt (in Rs. Lakh) for FY 2015-16 for Municipal Corporation Rajnandgaon
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One of the steady source of income is from letting out of properties by the Nagar Nigam. It is steadily 12 percent of
the total revenue income considering from FY 2013-14 to 2015-16. The rent from civic amenities is the maximum
contributing income which is around 95 percent of the rental income considering from FY 2013-14 to 2015-16. (refer
figure 17 below)
Rental Income from Municipal Properties - Nagar Palika Nigam Rajnandgaon
Rental Income from

Rent from Civic Amenities Rent from Lease of Lands Other Rents
Municipal Properties
2013-14 260.67 253.29 0.87 6.50
2014-15 283.74 251.88 0.05 31.81
2015-16 391.33 385.11 - 6.23
Figure 17: Rental income from Municipal Properties and Civic Amenities (in Rs. Lakh) trends
Revenue Expenses Trends
The revenue expenditure of Nagar Palika Nigam Rajnandgaon has increased significantly from INR 4,386.69 Lacs in
2013-14 to INR 5,743.01 Lacs in 2015-16 registering an increase of 31 percent whereas the revenue receipts during
the same period shows 8.35 percent. The establishment expense decreased from 36 percent in 2013-14 to 30
percent in 2015-16 of the total expenses. On the other hand, operation and maintenance expenses decreased from
18 percent to 17 percent of the total expenses over the same period. One of the prime reason in increase of
expenditure is the inclusion of non-cash expenses like Provisions and Write Off and Depreciation. The depreciation
itself accounted for 36 percent of expenditure. An analysis is presented table 4-2 and figure 18 below.
Table 4-2: Expenditure Status at a Glance – Nagar Palika Nigam Rajnandgaon (in INR Lakhs)
Particulars 2013-14 2014-15 2015-16
Establishment Expenses 1,597.99 1,955.96 1,699.20
Administrative Expenses 353.97 368.34 800.50
Operation & Maintenance 785.19 503.88 959.18
Interest and Finance Charges 0.09 0.42 0.17
Program Expenses 79.04 16.44 16.91
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Particulars 2013-14 2014-15 2015-16

Revenue Grants, Contribution and Subsidies 25.40 1.30 364.49
Provision and Write Off - 10.08 -
Depreciation 1,545.02 1,967.83 1,902.56
Total Expenditure 4,386.69 4,824.25 5,743.01
Excess of Income over Expenditure (1,900.01) (2,260.30) (3,048.79)
Source: Municipal Corporation Rajnandgaon
Revenue Expenditure - Nagar Palik Nigam Rajnandgaon
Revenue
Operation Interest
Establish Administr Grants, Provision Total
& and Program Depreciati
ment ative Contributi and Write Expenditu
Maintena Finance Expenses on
Expenses Expenses on and Off re
nce Charges
Subsidies
2013-14 1,597.99 353.97 785.19 0.09 79.04 25.40 - 1,545.02 4,386.69
2014-15 1,955.96 368.34 503.88 0.42 16.44 1.30 10.08 1,967.83 4,824.25
2015-16 1,699.20 800.50 959.18 0.17 16.91 364.49 - 1,902.56 5,743.01
Figure 18: Revenue Expenditure (in Rs. Lakh) Trends for Municipal Corporation Rajnandgaon
The Nagar Palika Nigam has in these years of analysis shows revenue deficit due to 31 percent increase in revenue
expenses without corresponding increase in revenue income.
4.2 LEGISLATIVE BACKING
4.2.1 The Chhattisgarh Municipal Corporation Act, 1956
Section 132 - Taxes to be imposed under this Act (1) For the purpose of this Act, the Corporation shall,
subject to any general or special order which the state Government may make in this behalf, impose in the
whole or in any part of the Municipal area, the following taxes namely:
(a) a tax payable by the owners of buildings or lands situated within the city with reference to the
gross annual letting value of the buildings or land, called the property tax, subject to the provisions of
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section 135, 136 and 138.
Section 133-A - Power to impose additional stamp duty on transfer of immovable property (1) The duty
imposed by the Indian Stamp Act, 1899 (II of 1899) on instruments of sale, gift and usufructuary mortgage,
respectively, of immovable property, shall in the case of instruments affecting immovable property situated
within the limits of any corporation and executed on or after the date on which the provisions of this Act are
made applicable to such limits be increased by one per centum on the value of the property so situated, or in
the case of an usufructuary mortgage on the amount secured by the instrument, as set forth in the instrument.
Section 135 - Imposition of property Tax - Notwithstanding anything contained in this Act, the tax under
clause (a) of sub-section (1) of section 132 shall be charged, levied and paid, at the rate not less than six
percent and not more than twenty percent of the annual letting value, as may be determined by the
Corporation for each financial year.
Section 138 - Annual letting value of land or building - (1) Notwithstanding anything contained in this Act
or any other law for the time being in force, annual letting value of any building or land, whether revenue
paying or not, shall be determined as per the resolution of the Corporation adopted in this behalf on the basis
of per square meter of the built up area of a building or land, as the case may be, taking into consideration the
area in which the building or land is situate, its location, situation, purpose for which it is used, its capacity for
profitable user, quality of construction of the buildings and other relevant factors and subject to such rules as
may be made by the State Government in this behalf
Section 163-A - Creation of Infrastructure Development Fund -- 1. Notwithstanding anything contained in

this Act or any other Act for the time being in force, the State Government may create an Infrastructure
Development Fund with a view to assist the Municipal Corporation in developing the infrastructure. 2. The
sources of the infrastructure fund and the procedure and manner in which the amount from the fund shall be
provided to Municipal Corporation shall be such as may be prescribed.
Section 308-B. Relaxation in Compounding the unauthorized construction - (1) Notwithstanding

anything contained in Section 308-A or any other provisions of this Act or any other law for the time being in
force, the Commissioner may, on the application made in this behalf by order, compound the cases involving
deviations from the approved plan or map, or construction made without permission by collecting
compounding fee at such rate as may be determined by the State Government.
Section 366. Licenses and permissions - (1) Whenever it is prescribed by or under this Act that the
permission of the Commissioner is necessary for the doing of any act, such permission shall, unless it is
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otherwise expressly provided, by in writing. Except when it is otherwise expressly provided in this Act or in
any rule or bye law made there under, a fee for every such license or written permission may be charged at
such rates as may be fixed by the Corporation and such fee shall be payable by the person to whom the
license is granted.
Section 415. Dispute between Corporation and Local Authorities - If any dispute arises between the
Corporation and any local authorities as regards anything done or to be done under this Act, it shall be
referred to the Government for decision and such decision may include an order as to the costs of any
enquiry ordered by the Government and shall be final.
4.2.2 The Chhattisgarh Municipal Corporation and Municipalities (Registration of Colonizer, Term and
Conditions) Rules, 2013.
Rule 3: Registration of colonizer or builder - (1) Any person who intends to undertake development of colony
under section 292-A of Municipal Corporation Act,1956 shall apply in Form-one appended to the Rules. The
application shall be accompanied by Bank Guarantee as under-
a) Municipal Corporation having population of 3 lakh or more Rs.10 lakh
b) Municipal Corporation having population of less than 3 lakh Rs. 05 lakh
c) Municipal Councils Rs. 03 lakh
d) Nagar Palikas Rs. 01 lakh
Rule 4: Registration and renewal fees. - (1) The Registration and renewal fees shall be as follows-
S.No. Area Amount of
Registration fee Renewal fee
a Municipal Corporation having population of 3 lakh or more Rs.30000/- Rs.30000/-
b Municipal Corporation having population of less than 3 lakh Rs.20000/- Rs.20000/-
c Municipal Councils Rs.10000/- Rs.10000/-
d Nagar Palikas Rs.5000/- Rs.5000/-
Rule 8: Application for the development of the colony and permission fee. - (1) When a colonizer
registered under Rule 3 wants to establish any colony and take up development work, he shall submit an
application to the competent authority together with the fee prescribed under rule 8(2) as under-
S.No. Area Fee for development of colony

a Municipal Corporation having population of 3 lakh or more Rs.50000/-per hectare
b Municipal Corporation having population of less than 3 lakh Rs.25000//-per hectare
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c Municipal Councils Rs.10000//-per hectare
d Nagar Palikas Rs.50000//-per hectare
Rule 11: Permission for development work. - Permission shall be granted after fulfilling the following
conditions-
(i) Out of plots/flats to be developed 15% of plots/10% of flats shall be reserved for transfer to the
competent authority for EWS.
(ii) Colonizer shall deposit 2% of the estimated cost of internal development cost of the colony as
supervision charge with the Municipality
(iii) Rupees 100//- per square metre for external development of the colony with the Municipality
(iv) The rate in (iii) relates to 2011 and will increase @5% per year thereafter.
Rule 15A - Regularization of unauthorized colonies that came into existence up to 31st December 2014. (1)
Notwithstanding anything contained in these rules, the unauthorized colonies that came into existence up to
31st December 2014 on other than Government land shall be regularized subject to the conditions given in
Notification dated 5th January 2016.
4.2.3 Notification No. F 7-8/2011/18 Dated 5th January 2016
In exercise of the powers conferred by Section 292-A, 292-B, 292-C, 292-F and 292-I read with Section 433
of the Chhattisgarh Municipal Corporation Act, 1956 (No.23 of 1956) and Section 339-A, 339-B, 339-C, 339-F
and 339-I read with Section 355 and 356 of the Chhattisgarh Municipalities Act, 1961 (No.37 of 1961), the
State Government, hereby, makes the following amendment in the Chhattisgarh Municipal Corporation and
Municipalities (Registration of Colonizer, Terms and Conditions) Rules, 2013, namely:
AMENDMENT in the said rules - 1. After rule 15, the following shall be added, namely, “15-A. Regularization
of Unauthorized colonies that came into existence up to 31st December 2014. (1) Notwithstanding anything
contained in these rules, the unauthorized colonies that came into existence up to 31st December 2014 on
other than government land shall be regularized subject to the following conditions:
(i) Such colony shall be deemed to be in the category of unauthorized colony which has been
constructed by the colonizer without obtaining the legal permission or no-objection certificate from the
department of Town and Country Planning, Urban land ceiling, Land Diversion, Nazul and Municipality
(ii) Unauthorized colonies situated on Development Plan main roads, parks, playgrounds, areas of
cultural heritage, river, tank, area of drains, green belt or area of recreation shall not be regularized.
(iii) Only such unauthorized colonies shall be regularized where at least twenty-five percent houses have
been constructed and people are residing therein. Where only the plots are in existence, action for
regularization shall be taken in accordance with rule 15 of this rule.
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(iv) Once the Competent Authority takes up the work of regularization of any colony in his hand it shall be
deemed that the diversion of land of that colony has been done and its use is in accordance with the
Master Plan of the City.
(v) The Competent Authority shall cause to be prepared the estimate and layout for the development
work, including the basic amenities of the unauthorized colonies for which the competent authority
shall organize a meeting and discuss with the inhabitants concerned and the colonizer, if available,
and after considering their suggestions, if any, finalize the estimate and layout. The amount of
expenditure to be incurred for preparing the layout shall be fixed not exceeding ten per cent of the
development charges and the same shall be included in the development charges.
(vi) The amount of estimated expenditure on development works shall be recovered as development
charges from the owner/occupants of the house/plot of the colony concerned in proportion of the area
of house/ plot which is in their occupation. In the layout prepared by the competent authority for the
total area of the colony, if open land for public amenities as per law is not available then the competent
authority shall estimate the cost of such requisite open land and recover double amount of such
estimated cost from the Colonizer.
(vii) In case the development fees or the cost of requisite open land, as the case may be, is not deposited
by the occupants/colonizer of the house/ plot, such amount shall be recovered in accordance with the
provisions of the Act as arrears of land revenue.
(viii) The competent authority shall deposit the amount of development fees received from the occupiers of
houses/plots in a separate bank account. Similarly, the amount which is recovered as arrears of land
revenue shall also be deposited in the same account. The drawal from such account shall be made
only for the expenditure relating to the development works of the concerned colony with the joint
signature of the competent authority and the Collector or his subordinate officer authorized by the
Collector in this behalf. The sanction of the Development Works shall be given by the concerned
authorities of the municipality within their powers as vested in them.
(ix) In such unauthorized colony in which the houses have been constructed, the concerned urban body
shall, after compromise with the house owners, regularize such unauthorized construction of the
house. The building permission fee and the compounding charges shall be recovered from such house
owner according to law.
(x) In the unauthorized colony when any house or plot has been regularized then such house/plot shall be
deemed to have been exempted ipso facto from penal proceeding.
Section 349 - Fees for licenses and permissions

The Council may charge such fee as may be prescribed by bye-laws for--
(i) any license granted under this Act;
(ii) any permission granted under this Act, for making any temporary erection or for putting up any
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projection or for the temporary occupation of any public street or any land or building belonging to the
Council; and
(iii) any application or appeal made to or filed before the Council under this Act and for giving copies, of its
orders or other documents.
(iv) The rate of the license and permission fees shall be revised once in every three years.
4.2.4 The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973
An Act to make provision for planning and development and use of land; to make better provision for the
preparation of Development Plans and Zoning Plans with a view to ensure Town Planning Schemes are
made in a proper manner and their execution is made effective; to constitute Town and Country Planning
Authority for proper implementation of Development Plan; to provide for the development and administration
of special areas through Special Area Development Authority; to make provision for the compulsory
acquisition of land required for the purpose of the Development Plans and for purposes connected with the
matters aforesaid.
Section 1. Short title, extent commencement and application - (1) This Act may be called the
Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973; (2) It extends to the whole of Chhattisgarh.
Section 3. Director and other officers - (1) The State Government shall appoint an officer to be the Director
of Town and Country Planning for the State. (2) The Director shall exercise such powers and perform such
duties as are conferred or imposed upon him by or under this Act.
Section 10. Restriction on use of land or development thereof - (1) Notwithstanding anything contained in
any other law for the time being in force, on or after the date of publication of the draft regional plan, no
person, authority, department of Government or any other person shall change the use of land for any
purpose other than agriculture, or carry out any development in respect of any land contrary to the provisions
of the draft plan, without the prior approval of the Director or an officer not below the rank of Deputy Director
authorised by the Director, in this behalf.
Section 13. Planning area - (1) The State Government may, by notification, constitute planning areas for the
purposes of this Act and define the limits thereof. (3) Notwithstanding anything contained in the Chhattisgarh
Municipal Corporation Act, 1956 (No. 23 of 1956), the Chhattisgarh Municipalities Act, 1961 (No. 37 of 1961)
or the Chhattisgarh Panchayat Raj Adhiniyam, 1993 (No. 1 of 1994), the Municipal Corporation, Municipal
Council or the Nagar Panchayat or a Panchayat, as the case may be, shall, in relation to the planning areas,
from the date of the notification issued under sub-section (1), cease to exercise the powers, perform the
functions and discharge the duties which the State Government or the Director is competent to exercise,
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perform and discharge under this Act.
Section 24. State Government to control development and use of land - (1) The overall control of
development and use of land in the State shall vest in the State Government. (2) Subject to the provisions of
sub-section (1) and the rules made under this Act, the overall control of development and use of land in the
planning area shall vest in the Director with effect from such date as the State Government may, by
notification, appoint in this behalf. (3) The State Government may make rules to regulate the control of
development and use of land in planning area and non-planning area in the State and may, by notification,
apply the said rules to any planning area or non-planning area from such, date as may be specified therein
and where the rules are made applicable to a non-planning area, such notification shall define the limits of the
non-planning area, provided that different rules may be made for different classes of local authorities in a
planning area or non-planning area, as the case may be.
Section 24A. Construction of an additional floor in a residential building - Where under the provisions of
this Act or rules made thereunder or any other law enacted under entry 5 of the State List of the Seventh
Schedule to the Constitution of India for the time being in force, regulating the constructions of residential
building or any rules or regulations or bye-laws made thereunder it is permissible to construct less than three
floors then notwithstanding anything contained in the Act or the law or the rules or the regulations or the bye-
laws aforesaid it shall he permissible to construct an additional floor in such residential building subject to
sanction of a plan of such construction under the aforesaid Act or law, as the case may be.
Section 26. Prohibition of development without permission - After the coming into operation of the
development plan, no person shall change the use of any land or carry out any development of land without
the permission in writing of the Director.
Section 29. Application for permission for development by others - (1) Any person, not being the Union
Government, State Government, a local authority or a special authority constituted under this Act, intending to
carry out any development on any land, shall make an application in writing to the Director for permission, in
such form and containing such particulars and accompanied by such documents complying with the
provisions of Acts, rules and bye-laws relating to development, control of the natural hazard prone area as
may be prescribed. (2) Such application shall also be accompanied by such fee as may be prescribed.
Section 38. Establishment of Town and Country Development Authority - (1) The State Government
may, by notification, establish a Town and Country Development Authority by such name and tor such area
as may be specified in the notification. (2) The duty of implementing the proposal in the development plan,
preparing one or more town development schemes and acquisition and development of land for the purpose
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of expansion or improvement of the area specified in the notification under sub-section (1) shall, subject to the
provision of this Act vest in the Town and Country Development Authority established for the said area.
Section 59. Development charges - (1) Where as a result of the implementation of town development
scheme, there is, in the opinion of the Town and Country Development Authority, as appreciation in the
market values of lands adjacent to and affected by a scheme the Town and Country Development Authority
may, in lieu of providing for the acquisition of such land, levy development charges on owners of such land.
(2) The development charges shall be an amount equal to not less than one-fourth and not more than one-
third of the difference between the value of the land on the date of publication of the intention to prepare the
town development scheme and the date of completion of the scheme.
Section 60. Mode of levy of development charge - (1) On completion of the town development scheme,
the Town and Country Development Authority, shall, by a notice in such form and published in such manner
as may be prescribed, declare the fact of such completion and of its intention to levy development charges in
the area covered by the scheme, calling upon owners of land liable to pay development charges to submit
objection, if any, within such period which shall not be less than thirty days from the date of publication of the
notice, and to such authority as may be specified in the notice. (2) The authority specified in the notice shall
after giving the objectors an opportunity to be heard, forward the report to the Town and Country
Development Authority. (3) On receipt of the report under sub-section (2) the Town and Country Development
Authority shall pass such orders thereon as it may consider fit. (4) The Town and Country Development
Authority shall, not later than three months after the publication of a notice declaring its intention to levy
development charges, issue a notice in the prescribed form, assessing the charges due from every' person
affected by the levy' of the charges. (9) The Town and Country Development Authority may, on an application
made to it in that behalf, permit assesse to make payment of development charges in annual instalments not
exceeding five and fix a date by which each instalment shall be payable.
Section 61. Fund of Town and Country Development Authority - The Town and Country Development
Authority shall have its own fund and all receipts of that authority shall be credited thereto and all payments
by that authority shall be made there from.
Section 61A. Annual contribution to Town and Country Development Authority from the State
Government and local authority - (1) Every Town and Country Development Authority shall be entitled to
receive grant in aid from the State Government and the local authority at the rate specified in sub- section (2).
(2) The grant-in-aid shall be calculated @ Rs. 2000 for every 10,000 units of population up to the first 50,000;
and @ Rs. 2000 for every 20,000 units of population above 50,000.
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Section 64. Constitution of special areas - (1) If any area, town or township, is designated as a special
area in the regional plan, or if the State Government is otherwise satisfied that it is expedient in the public
interest that any area, town or township should be developed as a special area. It may, by notification,
designate the area as a special area, which shall be known by such name as may be specified therein.
Section 65. Special Area Development Authority. - (1) Every special area shall have a Special Area
Development Authority.
Section 69. Powers of the Special Area Development Authority. - The Special Area Development
Authority shall (a) for the purpose of acquisition of land, exercise the powers and follow the procedure which a
Town and Country Development Authority have or follows under this Act; (b) for the purpose of planning,
exercise the powers which the Director has under this Act.
Section 73. Power of State Government to give directions - (1) In the discharge of their duties the officers
appointed under Section 3 and the authorities constituted under this Act shall be bound by such directions on
matters of policy as may be given to them by the State Government. (2) If any dispute arises between the
State Government and any authority, as to whether a question is or is not a question of policy, the decision of
the State Government shall be final.
Section 85. Powers to make rules. - (1) The State Government may, after previous publication, make rules
for carrying out the purposes of this Act. (2) In particular and without prejudice to the generality of the
foregoing power, such rules may provide for - (viii) (a) the form of application under Section 29 (1), the
particulars which such application shall contain and the documents which shall accompany such application;
(b) the fee which shall be accompanied with the application under Section 29 (2); (3) All rules made under this
Act shall be laid on the table of the Legislative Assembly.
4.2.5 The Chhattisgarh Nagar Tatha Gram Nivesh Niyam, 1975.
Rule 12. Form of application for permission for development of land by others –
(A) Any person not being the Union Government, State Government, or Local Authority, special authority shall
apply under the sub-section (1) of section 20 in Form VII for permission for development of land and in Form
VIII for development of land along with the schedule and specification sheet attached with the application
form. (B) Fees. – Every application submitted under sub-section (2) of section 29 shall be accompanied by a
fee specified below:
(i) For the development of land other than erection of a building Rs. 50 per acre or part thereof.
(ii) For building operation.
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S.No. Area Rate of Fee for ground Rate of fee for

floor subsequent storey
i For a ground floor area up to 1200 sq. ft Rs.20/- Rs.15/-per storey
ii For a ground floor area of more than 1200 sq. Rs.25/- Rs.20/-per storey
ft. but not exceeding 3000 sq. ft.
iii For a ground floor area of more than 3000 sq. Rs.50/- Rs.40/-per storey
ft. but not exceeding 6000 sq. ft.
iv For a ground floor area more than 6000 sq. ft. Rs.75/- Rs.50/-per storey
& above.
Note 1- For purposes of calculation of the fee ground area shall mean the area of the portion which is proposed to be
built upon excluding the internal court yard and portion.
Note 2- For purposes of rates prescribed above the basement where provided will be regarded as the first storey, the
ground floor over the basement as the second storey and so on.
4.2.6 The Chhattisgarh Bhumi Vikas Rules, 1984
Notification No. 2608-XXXII-i-86, dated 20-G1986. In exercise of the powers conferred by sub-section (3) of
Section 24 of the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973, (No. 23 of 1973), the State
Government hereby appoints the date of publication of this notification in the Chhattisgarh Gazette as the
date on which the Chhattisgarh Bhumi Vikas Rules, 1984 shall apply in the non-planning areas.
Rule 2(29-a). "Premium Floor Area Ratio” means floor area in addition to determined floor area of prescribed
area rate and area of which shall be prescribed by the Government and maximum limits of which shall not be
more than 50% of permissible floor area ratio.
Rule16. Application for permission for development or for Building.
Rule 21. Fees - (1) Validity of Notice subject to payment of Fees-No notice as referred to in rule l6 shall be
deemed valid unless the person giving notice has paid the fees for the time being in force to the Authority and
an attested copy of the receipt of such payment is attached with the notice. (2) In case the authority after
processing the application of building permit, the building permission/development. (3) Scale of Fee. -The
scale of fee shall be as under: -
A For permission for development Fee
(i) For development of area up to I hectare Rs. 2500/-
(ii) For development of area exceeding I hectare but not exceeding 2.5 hectare Rs. 5000/-
(iii) For development of area 'exceeding 2.5 hectare but not exceeding 5 hectares Rs. 10000/-
(iv) For development of area exceeding 5 hectares for every hectare or part additional fee at Rs.
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thereof 2500/-
B. For permission for building other than high rise buildings

S.No. Type of construction Built up area Fees chargeable in
Sq. meter Sq. meter Rupees
1 A building intended to be exclusively for 0 75 500
residence 76 125 875
126 200 1500
201 300 2250
301 400 3000
401 600 5000
601 750 6250
751 1000 8750
1000 1250 12500
1250 1500 I7500
1500 2000 25000
2001 2500 37500
2500 Above 37500 and l5 per
square meter for
additional fees
2 A building intended to be used as shop, Fee specified in item no. 1 together with an additional charge
store house, factory or for carrying or of 50% of such amount of fees, except that for a built-up area
trade or business or any other above 2500 square meter the fees chargeable shall be Rs.
commercial or industrial purpose. 15/- per square metres for additional fees.
3 A building intended to be used as Fees as prescribed in item no. 1
administrative block in a factory.
4 A building intended to be used for shop- Fees specified in item no. 1 together with an additional charge
cum-residence purposes. of 50% such amount of fees.
5 A building intended to be used as cinema Up to 800 seating capacity @ Rs. 15,000/-;
theatre. Above 800 seating capacity @ Rs. 25,000/-
6 A building intended to be used for any 50% of fees specified in item No. 4
social charitable culture, educational
purposes, Dharmshala and similar types
of building and for any other purpose not
specifically provided for.
7 Addition or alteration with built up area or Rs. 100/- in each case of building mentioned in item 1, 3 and
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external addition or alteration which does 6 Rs. 500/- in each case of building mentioned in item No. 2. 4
not add to the built-up area such as Court and 5.
yard compound N-4 wall, alteration in
elevation or roofing such tiles to A.C.
Sheet or flat surface, additional opening
or closing not covered by proviso to sub-
rule (l) of Rule 14.
8 ln case of addition alteration in the Up to 5% Nil. above 5% to 10% - Rs. 125/-. Above I0% fresh
proposed plan. application according to the rule shall be necessary
9 Revaluation of the building permission l0% of the amount of fees charged originally in respect of the
building
S.No. C. For permission for high-rise building

Type of construction Fees chargeable in Rupees
1 A building intended to be exclusively for residence. Rs. 25/- per square meter floor area space.
2 A building intended to be used as shop, store , house, Fees prescribed in item no. 1 with additional
factory or for carrying on trade or business or any other charges of 100% of amount of fees.
commercial or industrial purpose.
3 A building intended to be used as administrative block in a Fees as prescribed in item no. 1
factory.
4 A building intended to be used for shop cum- residence Fees specified in item no. 1 together with
purposes. additional charges of 50% of such amount of
fees.
5 A building intended to be used for any special, charitable, 50% of fees specified for item no. 1
cultural, educational purposes, including hospital, school,
club, Dharmshala and similar types of building and for any
other purpose not specifically provided for.
S.No. D. Fees for the permission of development of Integrated Township

Name of Planning / Special Area Fees
1 Raipur, Naya Raipur Rs. 200 per sq. rneter
2 Bilaspur, Korba, Bhilai Rs. 150 per sq. meter
3 Other Planning & Special Area Rs. 100 per sq. Meter
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E. In addition to above Re. 1/- per square meter as Environment fee for the development of sub-town shall
have to be paid.
Rule 95. Power of relaxation - The Director of Town and Country Planning, Government of Chhattisgarh
may permit special relaxation to any of the rules, provided the relaxation sought does not violate the health
safety, fire safety. structural safety, public safety of the inhabitants and the building and neighbourhood.
4.2.7 The Chhattisgarh Land Revenue Code, 1959
The Chhattisgarh Government vide notification no. F-6-2/Revenue/2001 dated 23-11-2001 issued adaptation
of laws order, 2000, which is applicable to the entire state of Chhattisgarh with effect from 1-11-2000.
According to this order, M.P. Land Revenue Code,1959 as amended up to 31.10.2000 is adapted and
extended to the State of Chhattisgarh.
Section 59. Variation of land revenue according to purpose for which land is used. (5) where land for use for
any purpose is diverted to any other purpose and land revenue is assessed thereon under the provisions of
this section, the competent authority shall also have power to impose a premium on the diversion in
accordance with rules made under this code.
Section 258. General rule making power. -

1) The state government may make rules generally for the purpose of carrying into effect the provisions
of this code.
2) In particular, and without prejudice to the generality of the foregoing powers such rules may provide
for-
(iii) regulation of assessment of land revenue on diversion of land to other purposes and imposition
of premium under section 59;
(vi) diversion of survey numbers into sub-divisions and apportionment of the assessment of survey
number among the sub-divisions of a survey number under section 70;
(xiv) the manner of dividing plot numbers into sub-divisions and apportioning the assessment of plot
number among, the sub-divisions; and the limits either of area or of land revenue or both in any
local area for recognition of sub-divisions under section 94.
3) All rules made under this section shall be subject to the condition of previous publication.
4) All rules made under this code shall be laid on the table of the legislative Assembly and shall be
subject to such modifications as the legislative Assembly may make.
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4.2.8 Rules regarding Alteration of Assessment and Imposition of premium for the purpose of levy of
premium on Agricultural land
Rule 14 (1) - For the purpose of levy of premium of agricultural land other than the land specified in the
proviso to sub-section (5) of section 59 of the code diverted to non-agricultural purposes, in any town and
village in the state of Chhattisgarh shall be divided into the following classes as shown in column (1) of
schedule-A appended to these Rules and the premium shall be imposed according to the rates specified in
column (2), (3), (4), (5), (6) and (7) of the said Schedule.
Schedule-A
Classes Residential Residential Commercial Public/ SEZ Medical
purpose Unit/ or Industrial Institutional Facility
Colony/ Purpose Purpose
Project
Municipal Rs.15/-per Rs.20/-per Rs.25/-per Rs.20/-per Rs.20/-per Rs.15/-per
Corporation sqm. sqm sqm sqm sqm sqm
and Nagar
Palika area
5 km within Rs.10/-per Rs.15/-per Rs.20/-per Rs.15/-per Rs.15/-per Rs.10/-per
Municipal sqm sqm. sqm sqm sqm sqm
Corporation
and Nagar
Palika area
4.2.9 Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972
The name M.P. was substituted by Chhattisgarh by section 79 of the M.P. reorganisation Act, 2000 vide
notification no. 2458/2001/N.Pra. dated 30th June 2001
Section 51 CHAPTER XI - Assessment and Recovery of Betterment Charges.

Betterment charges - (1) When by making of housing scheme any land in the area comprised in the scheme
will in the opinion of the Board be increase in value, the Board in framing the scheme may declare that
betterment charges shall be payable by the owner of the land or any person having an interest therein in
respect of the increase in value of land from the execution of the scheme. (2) Such increase in value shall be
the amount by which the value of the land on the completion of the execution of the housing scheme,
estimated as if the land were clear of the buildings exceeds the value of the land prior to the execution of the
scheme estimated in like manner and the betterment charges shall be one half of such increase in value.
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4.2.10 Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam, 2002.
An Act to regularize the unauthorised development in the Planning Area in the State of Chhattisgarh, by
vesting certain powers specified herein, in an Authority to exercise, perform and discharge the duties
entrusted to them within specified duration of time. It extends to the whole of Chhattisgarh.
Section 2 - The provisions of this Act shall apply to such unauthorized developments which were in existence
on or before the date notified by the State Government.
Section 4(1) - The State Government shall constitute for each district an Authority to be called "District
Regularisation Authority" for the purpose of regularisation of unauthorized development.
Section 6 - The Authority shall have power to (iii) For the purpose of imposing penalty the authority shall
evaluate the unauthorized development on the basis of prevailing market value of land, construction, etc. The
authority shall also evaluate its monthly rent. (iv) The Authority shall determine penalty, on the basis of such
evaluation done and the cost of development of basic infrastructure in the vicinity which may be required
because of the unauthorized development. (v) Upon compliance of the order issued by the Authority and
deposit of the regularisation penalty, such development would cease to be unauthorized and a certificate to
that effect will be issued to the applicant by the. Authority in such Performa as may be prescribed.
4.2.11 Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran (Sanshodhan) Adhiniyam, 2003.
Section 6-A - Special provision for residential building

For imposition of penalty on residential buildings, the unauthorised development shall be classified on the
basis of its plot-area, as follows:
a. Up to 120 sqm
b. from 120 sqm to 240 sqm
c. from 240 sqm 360 sqm
d. above 360 sqm
For residential buildings the penalty shall be fixed on the basis of the floor area of the unauthorised
development. If the building is constructed without any building permission, then the penalty shall be imposed
on the total floor area. If the building is constructed with additional floor area other than specified in the
building permission, penalty shall be imposed only on such additional area.
For residential buildings, the rate of penalty shall be as follows:

a. No penalty shall be imposed on the buildings constructed on plot areas up to 120 sqm
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b. The rate of penalty for the buildings constructed on plot areas above 120 sqm shall be as follows:
Classification on the basis of plot area Rate per sqm (in rupees)
Up to 120 to 240 sqm 100
Up to 240 to 360 sqm 150
above 360 sqm 250
4.2.12 The Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Niyam, 2002
Rule 5.-Fixation of Penalty

(1) For the purpose of deciding the penal amount to be imposed on any applicant, except for the development
carried out for residential purposes. the area wise market value of the unauthorized development. shall be
fixed by the Authority and represented as per unit developed area.
(2) The Calculation of market rate shall be on the basis of land value per unit area, the construction cost "per
unit area, and the development cost per unit area”. Thus, the market rate shall be calculated as follows:
Market rate = Land value per unit area + construction cost per unit area + development cost per unit
area.
Calculation of development expenditure will be made on the basis of development made in the surroundings
or development works which will be required to be done, due to regularisation of the unauthorised
development.
(3) Marked value of the land and valuation of the construction shall be done as per Bharatiya Stamp
Adhiniyam, 1899 and the rules made there under "Moolya Margdarshak Sidhanton Ka Banaya Jaana Aur
Unka Punarikshan Niyam, 2000".
(4) The Authority shall publish the market rate so fixed for any area, in widely circulated newspaper and
display the map showing the different areas having different categories of rates prescribed by it.
(5) (i) For the purpose of deciding the penal amount in individual cases, the unauthorized development may
be categorised into residential and non-residential property on the basis of its purpose and use,
(5) (ii) The property, which is developed with residential purposes and is being used for the same, shall be
called residential property
(5) (iii) All other developed properties except those defined in sub-rule (5) (ii), shall he have termed non-
residential properties.
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In each case, group shall be decided on the basis of total developed area. Thus, the total of authorised area
and unauthorised developed area of a single building shall be taken into consideration for deciding as to
which group, the case belongs to.
(6) For the developments carried out for residential purposes, the penalty shall be imposed on the basis of
provisions made in section 6-A of the Act.
7 (1) For calculation of the penal amount to be imposed on unauthorized developed properties for non-
residential purposes, the applicants shall be classified into any of the five categories as given in the table
below.
S.No. Group of Applicant Area of Unauthorized Development
1 Group A1 Up to 20 square metres
2 Group B1 More than 20 square metres and up to 60 square metres
3 Group C1 More than 60 square metres and up to 100 square metres
4 Group D1 More than 100 square metres and up to 200 square metres
5 Group E1 More than 200 sqm.
(2) The Penal amount to be imposed for regularisation of unauthorized developed property shall be decided
on the basis of the percentage of market rate fixed for the area in which the property is located.
4.2.13 Chhattisgarh Anadhikrlt Vikas Ka Niyamltikaran (Sanshodhan) Adhiniyam, 2016
An Act further to amend the Chhattisgarh Anadhikrlt Vikas Ka Niyamitikaran Adhiniyam, 2002.
Section 2 - Amendment of section 3 of Chhattisgarh Anadhikrlt Vikas Ka Niyamitikaran Adhiniyam, 2002.

After clause (ii) of sub-section (1) of Section 3 of the Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran
Adhiniyarn, 2002 (No. 21 of 2002), (hereinafter referred to as the Principal Act), the following shall be
inserted, namely, "(ii-a) "Building permission fee" means such fee as is ascertained from time to time under
clause (b) and (c) of sub-rule (3) of rule 21 of the Chhattisgarh Bhumi Vikas Rules, 1984,”
Section 3 - Amendment of section 6 of Chhattisgarh Anadhikrlt Vikas Ka Niyamitikaran Adhiniyam, 2002. In

sub-section (1) of Section 6 the Principal Act - (a) for clause (iii), the following shall be substituted, namely,
"(iii) For the purpose of imposing penalty all commercial and other non-residential buildings not covered under
Section 6-A, the Authority shall follow the following scale, namely :-
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S.No. Plot Area having Unauthorized Construction Penalty Payable

1 Up to 100 sq meters 16 times of building permission fees
2 Above 100 sq. meters but less than 200 sq. meters 21 times of building permission fees
4 Above 300 sq. meters but less than 400 sq. meters 31 times of building permission fees.
6 Above 500 sq. meters but Jess than 600 sq. meters 41 times of building permission fees.
7 Above 600 sq. meters but less than 700 sg meters 46 times of building permission fees
8 Above 700 sq. meters 51 times of building permission fees"
(b) clause (iv) shall be deleted.
Section 4 - Amendment of section 6A of Chhattisgarh Anadhikrlt Vikas Ka Niyamitikaran Adhiniyam, 2002 -

For clause (2) of sub-section (iii) of Section 6-A of the Principal Act, the following shall be substituted, namely,
"(2) The rate of penalty for the buildings constructed on plot areas above 120 sqm shall be as follows:
S.No. Classification on the basis of Plot Area Rate per sqm (in Rupees)
1 from 120 to 240 sqm 125
2 from 240 to 360 sqm 200
3 above 360 sqm 300"
4.3 VCF tools in Practice in Chhattisgarh / Rajnandgaon
Summary of land based fiscal tools currently being levied in Chhattisgarh / Rajnandgaon:
4.3.1 Property tax
Property tax is a tax levied by the municipal corporation on the properties (including the land and any building
constructed theron) in city. It is ad-valorem tax payable annually by the property owner based on the rate to be
charged on the built-up area of property. Property tax is guided by the Chhattisgarh Municipal Corporation Act, 1956,
subject to the provisions of section 132 to 138.
The annual letting value of land and building is determined under the “Bhawano / Bhumiyon Ki Varshik Bhada Mulya
ka Avdharan Niyam, 1997”. The annual letting value of land or building whether revenue paying or not, is
determined on the basis of per square meter of the built-up area of a building or land, (as the case may be) taking
into consideration the area in which the building or land is situate; its location, purpose for which it is used, its
capacity for profitable user, quality of construction of the buildings and other relevant factors and subject to such
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rules as may be made by the State Government in this behalf. The Property tax, Water tax, Samekit Kar (general
sanitation tax, light tax, and fire tax), and Education cess is calculated on the basis of the annual letting value. Table
4-3 shows the annual revenue collected by Municipal Corporation of Rajnandgaon from Property Tax.
Table 4-3 : Property tax revenue (in Rs. lakhs)
Year 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 CAGR

Demand 150.00 190.00 212.00 212.00 246.00 459.00 20%
Collection 144.49 186.75 190.16 143.00 202.00 329.00 15%
Collection efficiency 96% 98% 90% 67% 82% 72%

4.3.1.1 Rate of property tax in Rajnandgaon:

Rajnandgaon municipal area has been divided into 5 zones for the purpose of derivation of property tax. The zone
wise annual letting value is determined by the ULB on the basis of various factors for land and building both. The
Table 4-4, Table 4-5 and Table 4-6 below describes the prescribed letting value for land, prescribed letting value for
built-up area in different zones and property tax rates respectively as per the notification dated 30.3.2016.
Table 4-4 : Annual letting value for land (Rs. per sqft)
Zone No. Annual letting value for land (Rs. per sqft)
Zone 1 5
Zone 2 3
Zone 3 3
Zone 4 3
Zone 4 2
Table 4-5 : Zone wise annual letting value for (Rs. per sqft) for building on built up area
Pacca Semi-pacca Kachha
Zone No.
main road off main road main road off main road main road off main road
Ground floor 29 26 20 17 17 14
1
Upper floors 14 12 9 6 8 6
Ground floor 26 23 17 14 11 8
2
Ground floor 23 20 15 12 11 8
3
Ground floor 21 16 14 11 11 8
4
Ground floor 14 11 8 6 5 3
5
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Table 4-6 : Property tax rate is defined as under (applicable since 30.03.2016)
S.No. Annual letting value (Zone 1 – 15) Property tax rate on annual letting value of
residential / industrial / commercial building and
land
1 Annual letting value upto INR 6000/- Nil
2 Annual letting value INR 6001/- to 12,000/- 6%
3 Annual letting value INR 12,001/- to 20,000/- 8%
8 Annual letting value more than INR 1,00,001/- 20%
4.3.1.2 Vacant land tax:

The above property tax is applicable on the adjoining vacant lands (excluding the marginal open space) as well.
However, currently it is not being levied in Rajnandgaon.
4.3.1.3 Water tax:

As per the Chhattisgarh Municipal Corporation Act 1956, amended section no 132 (4), the following is the applicable
rate of water tax:
a) INR 60/- per month on properties exempted from property tax
b) For properties not exempted from property tax, INR 200/- + 5% of applicable property tax
4.3.1.4 Samekit Kar:

As per the Chhattisgarh Municipal Corporation act 1956, amended section no 132 (5), the following is the applicable
rate of Samekit tax (general sanitation tax, light tax, and fire tax):
a) INR 300/- annually on properties exempted from property tax (Annual letting value less than Rs.6,000)
b) For properties not exempted from property tax, INR 600/- (Annual letting value more than Rs. 6,001)
4.3.1.5 Efficacy of the tool

The efficacy of the existing tools is evaluated based on the following parameters:
• Efficiency: The tool should have little to no scope for avoidance and should be able to capture any increase in
the land value due to infrastructure provision.
• Equity: The charge rates towards tax or user fee should be should be equitable to the land values.
• Adequacy: In terms of revenue generating capacity, stability, and buoyancy.
• Manageability: In terms of implement-ability and administrative costs.
• Legal feasibility: In terms of backing with state/municipal legislations or government orders.
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The appropriateness of existing LBFTs tool of property tax for RMC in terms of their efficiency, equity, adequacy,
manageability, and legal feasibility is presented below:
VCF Tool Efficiency Equity Adequacy Manageability

Property tax Not buoyant as Not equitable. The city About 9% of the Yearly charge
Vacant land tax reference rates are has been divided into revenues of the requires resources.
Water tax revised after long only 5 zones to create Municipal corporation
Samekit Kar interval of times. a distinction between come from property
Education Cess deferring values tax including vacant
across the city. land tax, Samekit kar
and Jal Kar.
Legal provision: Chhattisgarh Municipalities Act, 1961
Remarks
• The value capture tools distinguish between the rates applicable on the properties based on different zones,
type of structure, the commercial potential, the class of road on which it is located and the use to which the
property put to.
• Though the structure for calculation of charges is aligned with the principle of value capture finance, its
implementation does not effectively facilitate value capture finance.
• The prescribed annual letting values are segregated in only five zones; hence it fails to reflect the higher or
lower value of underlying asset across the zones.
• The prescribed rates are not linked with any index and are not revised automatically. The frequency of
revision has been observed to be inadequate.
4.3.2 Building Permission Fee (Bhawan Anugya Shulk)
Building permission charges are levied by the competent authority (Municipal Corporation / Development Authority)
for providing basic public amenities and for the execution of development works and projects. The building
permission (Bhawan Anugya) charges are guided by the provision of the Chhattisgarh Bhumi Vikas Rules, 1984 (As
per C.G. Gazette Notification dated 07th May 2016). These provisions are same for whole state of Chhattisgarh. It is
provisioned to be increased by 10% every year. Table 4-7 shows the annual revenue collected by Municipal
Corporation of Rajnandgaon from Building Permission Fee.
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Table 4-7 : Revenue from building permission charges (In Rs. lakhs)
Parameter 2014-15 2015-16 2016-17

Building Construction Permission Charges 7.54 9.79 14.91
4.3.2.1 Rate for calculation of charges:
a) For permission of development
S.No. Particular Amount (INR)

i For development of area upto 1 Ha 3,750
Ii For development of area exceeding 1 Ha but not exceeding 2.5 Ha 7,500
iii For development of area exceeding 2.5 Ha but not exceeding 5 Ha 15,000
iv For development of area exceeding 5 Ha for every Ha or part thereof, 15,000 + 3,750
additional fee @
b) For permission of building other than multi-storied buildings
S.No. Type of construction Fees chargeable

1 Building intended to be used for residential use Built up area (sqm)
Amount (INR)
0 75 825
76 125 1447
126 200 2475
201 300 3713
301 400 4950
401 600 8250
601 750 10313
751 1000 14438
1001 1250 20625
1251 1500 28875
1501 2000 41250
2001 2500 61875
61875 and INR 20 for
Above 2500 every additional sqm
2 A building intended to be used as shop, store Fee specified in item no. 1 together with an
house, factory or for carrying or trade or additional charge of 50% of such amount of fees
business or any other commercial or industrial
purpose.
3 A building intended to be used as administrative Fees as prescribed in item no. 1
block in a factory.
4 A building intended to be used for shop-cum- Fees specified in item no. 1 together with an
residence purposes. additional charge of 50% such amount of fees.
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S.No. Type of construction Fees chargeable

5 A building intended to be used as cinema Seating capacity 800 – INR 22,500/-
theatre. Seating capacity more than 800 – INR 37,500/-
6 A building intended to be used for any social 50% of fees specified in item No. 4
charitable culture, educational purposes,
Dharmshala and similar types of building and for
any other purpose not specifically provided for.
7 Addition or alteration with built up area or Rs. 150/- in each case of building mentioned in
external addition or alteration which does not item 1, 3 and 6, Rs. 750/- in each case of building
add to the built up area such as Court yard mentioned in item No. 2. 4 and 5.
compound N-4 wall, alteration in elevation or
roofing such tiles to A.C. Sheet or flat surface,
additional opening or closing not covered by
proviso to sub-rule (l) of Rule 14.
8 ln case of addition alteration in the proposed Up to 5% Nil. above 5% to 10% - Rs. 200/-. Above
plan. I0% fresh application according to the rule shall be
necessary
9 Revaluation of the building permission 15% of the amount of fees charged originally in
respect of the building concerned
a) For permission of multi-storied buildings
S.No. Type of construction Fees chargeable in Rupees

4.3.2.2 Upkar Rashi (1%) / Karmakar Shulk / Labour Welfare Charges

As per UADD letter no. 6702 / 7733 / 2014 / 18 dated 21.04.2016, If total building cost is more than Rs. 10.0 lakhs
then Upkar Rashi is payable @ 1% of total BUA in sq.ft x Rs. 1000.

The appropriateness of existing LBFTs of building permission fee for RMC in terms of their efficiency, equity,
adequacy, manageability, and legal feasibility is presented below:
Building It is not linked to the Not equitable. The About 0.36% of the The charges are
permission fee land value hence not charges are linked revenues of the levied at the point
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buoyant. with the area of the Municipal of building plan
property and vary Corporation come approval for which
between INR 11 to from building there is an existing
INR 30 per sqm. permission fee setup. However in
However; there is no absence on any
provision for these online system the
charges to be value administrative
based. costs are high.
Legal provision: These charges are guided by the provision of the Chhattisgarh Bhumi Vikas Rules, 1984 (As per
C.G. Gazette Notification dated 07th May 2016). These provisions are same for whole state of Chhattisgarh.
Remarks
• The tool distinguishes between the charge applicable on the properties based on the size and use, but does
not distinguish between the intrinsic value of the underlying asset.
• As per the latest gazette, buoyancy has been built in by introducing an annual increment of 10%.
4.3.3 Development Charges (Vikas Shulk)
Development charges are levied by the competent authority (Municipal Corporation / Development Authority) for
providing basic amenities and for the execution of development work and projects. These charges are levied for the
recovery of the total cost of amenities already provided or proposed to be provided in an area. The charges so levied
should not exceed the amount of the total cost of amenities. The development charge is levied under the provisions
contained in the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973. However the rate of development
charges is defined by the ULB and revised from time to time. The charges are levied along with the building
permission charges.

Rajnandgaon Municipal Corporation levies two types of development charges i.e. Betterment levy (Nagar Sudhar
Shulk) at Rs. 1 per sqft on total built up area and Development charge (Vikas Shulk) at Rs. 5.5 per sqft on total built
up area. Hence total development charges levied in Rajnandgaon are Rs. 6.5 per sqft.
In various other cities of Chhattisgarh such as Korba, Raigarh, Bhilai, Durg, etc. the betterment levy has been
repealed and merged with development charges, however in Rajnandgaon there is still a provision of separate
charges against Nagar Sudhar Shulk and Vikas Shulk.
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The appropriateness of existing LBFTs of development charges for MCR in terms of their efficiency, equity,

Development It is not buoyant as Not equitable. The About 0.36% of the The charges are
charges there is no provision charges are linked revenues of the Municipal levied at the point
of an automatic with the area of the corporation come from of building plan
annual increase nor land building permission fee, approval for which
it is linked with any which includes the there is an existing
index development charges as setup
well
Legal provision: These are charges as per the rules formulated by Corporation from time to time.
Remarks
• The tool only distinguishes between the charge applicable on the residential, commercial and industrial
properties, but it does not distinguish between the charges based on the intrinsic value of the underlying
asset.
• The tool does not have any inbuilt buoyancy
• The tool in its current form is not equitable and fails to capture any increase in value of the underlying asset.
4.3.4 Regularisation Charges (Samjhota / Rajinama Shulk)
The regularisation charges or Samjhota / Rajinama Shulk is an amount levied by a governing authority to regularize
the development of newly developed or existing unauthorized colonies / building. The regularisation charges are
levied under the provisions contained in the Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam, 2002
(Sanshodhan Adhiniyam, 2003 and 2016). This is an act to regularize the unauthorised development in the Planning
Area in the State of Chhattisgarh, by vesting certain powers specified herein, in an Authority to exercise, perform and
discharge the duties entrusted to them within specified duration of time. It extends to the whole of Chhattisgarh. The
current applicable rates are as per UADD letter no. AF 8-6 / 2015 / 18 dated October 2015.
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As per the Chhattisgarh Anadhikrlt Vikas Ka Niyamltikaran (Sanshodhan) Adhiniyam, 2016, an Act further to amend
the Chhattisgarh Anadhikrlt Vikas Ka Niyamitikaran Adhiniyam, 2002; for the purpose of imposing penalty on all
commercial and other non-residential buildings not covered under Section 6-A, the Authority shall follow the following
scale, namely:
S.No. Plot Area having Unauthorized Construction Penalty Payable

1 Up to 100 sq meters 15 times of building permission fees
2 Above 100 sq meters but less than 200 sq meters 20 times of building permission fees
4 Above 300 sq meters but less than 400 sq meters 30 times of building permission fees.
6 Above 500 sq meters but Jess than 600 sq meters 40 times of building permission fees.
7 Above 600 sq meters but less than 700 sg meters 45 times of building permission fees
8 Above 700 sq meters 50 times of building permission fees"
For residential buildings the penalty shall be fixed on the basis of the floor area of the unauthorised development. If
the building is constructed without any building permission, then the penalty shall be imposed on the total floor area.
If the building is constructed with additional floor area other than specified in the building permission, penalty shall be
imposed only on such additional area.
For residential buildings, the rate of penalty shall be as follows:
No penalty shall be imposed on the buildings constructed on plot areas up to 120 sqm
The rate of penalty for the buildings constructed on plot areas above 120 sqm shall be as follows:
Classification on the basis of plot area Rate per sqm (in rupees)
Up to 120 to 240 sqm 100
Up to 240 to 360 sqm 150
above 360 sqm 250

The appropriateness of existing LBFTs of regularisation charges for RMC in terms of their efficiency, equity,
Regularisation It is not buoyant as Not equitable in case of plot The current The charges are
charges there is no provision regularisation. The charges structure of levied post building
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of an automatic are linked with the area of the regularisation construction. The
annual increase nor plot and do not distinguish charge levy is post- building permission
it is linked with any either between the value of the facto and is linked department is well
index plot or the benefits availed by with regularisation placed to handle
the plot owner. drive across the these.
However, in case of building state.
regularisation, the
regularisation charges are
fairly equitable as it is linked to
the value of the under lying
asset
Legal provision: Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam, 2002 (Sanshodhan Adhiniyam, 2003
And 2016)
Remarks
• Regularisation of unauthorized development in the current form is a post facto tool used by the municipal
corporation to regularize the unauthorized construction and unauthorized area development.
• The regularisation of buildings is value linked, however the regularisation of area development is area
linked with a high multiple being used for larger plots.
• The tool is dependent upon regularisation drive conducted from time to time
• The tool in the current form fails to capture value from an intrinsic demand of property owners to avail
higher benefits through relaxation of rigid development control regulations.
• A proactive development Regularisation tool which makes available certain relaxations in development
control regulations including FSI, ground coverage, set back and height restrictions, linked with the value of
the underlying asset is better tool for value capture.
4.3.5 Property Development and Leasing
Urban Local Bodies have significant lands at prime locations within a city. Such lands are often unutilized / under-
utilized leading to significant inefficiencies in land value capture. Though one of the options to unlock land value
often exercised by development authorities is land sale, the tool results in only a one time value gain. A better tool
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often under-utilized is that of property development on vacant land parcels, and the properties thus developed being
put out for market linked efficient short-term leases.
The tool is also capable of addressing essential retail and commercial need gaps, like local shopping centers,
hawkers market, etc. Table 4-8 shows the annual revenue collected by Municipal Corporation of Rajnandgaon from
rental income of Municipal Properties.
Table 4-8 : Revenue from Renting of Municipal Properties (In Rs. lakhs)
Parameter 2013-14 2014-15 2015-16

Rental income from Municipal Properties (in lakhs) 260.67 283.74 391.33

The appropriateness of existing LBFTs of property development and leasing for RMC in terms of their efficiency,
equity, adequacy, manageability, and legal feasibility is presented below:

Property The property lease Property rents, when Approx. 14.52% of The administration
development and revenues need to be charged market the revenues of the can continue to
leasing managed by a linked, as a Municipal corporation use the existing
specialised asset percentage of the come from the rental administrative set
management team. property value, are income from up being utilised to
Existing leases are equitable. The municipal properties. manage the
managed by ULB property owners with The leases lack existing property
itself. With suitable higher property value buoyancy and market leases without any
capacity building are charged more correction incremental cost
exercises the rent as compared to mechanism leading expenditure.
existing setup can be those with lesser to sub-optimal rent
enhanced to property value. collection, and
increase the missed opportunity to
efficiency of the tool. capture property
value appreciation
benefits.
Legal provision: The legal provisions for exists.
Remarks
• Though the sale of land is not considered to be a VCF tool, remunerative use of land is often utilized by
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ULBs as an effective land value capture tool.
• The sale of land results in one time gain with the ULBs loosing rights to capture any future increase in land
value.
• Prime properties with high demand and growth potential should be developed and leased on short term
leases. Any market linked increase in rentals would facilitate effective value capture throughout the life of
property.
• Suitable rent revision and renegotiation provision should be built into the lease agreement to ensure the
buoyancy in value capture.
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CHAPTER 5 :
IDENTIFICATION OF APPLICABLE VCF
TOOLS FOR RAJNANDGAON
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5 IDENTIFICATION OF APPLICABLE VCF TOOLS FOR RAJNANDGAON
This section identifies the potential reforms that can be made in the existing LBFTs and suggests new LBFTs that
can be introduced to improve the revenue base of the ULB.
5.1 Property Tax
The property tax in Rajnandgaon is charged as under:
• The property tax is charged as a percentage of the annual letting value of the property.
• The annual letting value of land or building whether revenue paying or not, is determined on the basis of per
square meter of the built-up area of a building or land, (as the case may be) taking into consideration the micro-
market in which the building or land is situate; its location, purpose for which it is used, its capacity for profitable
user, quality of construction of the buildings and other relevant factors and subject to such rules as may be
made by the State Government in this behalf.
• The annual letting value was last revised in 2017, after almost 5 years of its previous revision in 2012.
Key observations
• The mechanism of property tax is linked to annual letting value and hence factors in land value capture.
• The system lacks buoyancy.
• The city has been divided into only 5 zones to create a distinction between deferring values across the city
zones and hence fail to distinguish between high value and low value properties.
• The collection efficiencies are fluctuating between 67% - 98%.
5.1.1 Revenue Potential from Property Tax/ Fee
The revenue (collection) from property tax for the year 2015-16 is Rs. 252.99 lakhs, which is approx 9% of total
revenue of RMC.
An analysis of annual letting value vis-à-vis computation of property tax for various sizes of commercial and
residential properties is presented in Table 5-1 and Table 5-2 respectively.
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Table 5-1 : Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Commercial Properties
Pucca Annual Letting Rate Annual Letting Applicable Property Property Tax For
Commercial (Rs. Per sqft) for Value (in Rs.) for Tax Rate for Commercial
(area in sq ft) Commercial Commercial Commercial Property Property (in Rs.)
250 29 7250 6% 435
400 29 11600 6% 696
500 29 14500 8% 1160
1000 29 29000 10% 2900
1250 29 36250 12% 4350
2000 29 58000 15% 8700
3000 29 87000 18% 15660
4000 29 116000 20% 23200
Table 5-2 : Annual Letting Value vis-à-vis Computation of Property Tax for various sizes of Residential Properties
Pucca Annual Letting Rate Annual Letting Applicable Property Property Tax For
Residential (Rs. Per sqft) for Value (in Rs.) for Tax Rate for Residential
(area in sqft) Residential Residential Residential Property Property (in Rs.)
500 29 14500 8% 1160
750 29 21750 10% 2175
1000 29 29000 10% 2900
1250 29 36250 12% 4350
1500 29 43500 12% 5220
2000 29 58000 15% 8700
2500 29 72500 15% 10875
3500 29 101500 20% 20300
The amount of property tax paid by a property owner is fixed for a size of the property irrespective of its land value.
An analysis of Property Tax amount as percentage of Land Values for Commercial and Residential properties is
presented in Table 5-3 and Table 5-4 respectively.
Table 5-3 : Property Tax amount as percentage of Land Values for Commercial properties
S.No Locality Land Value Pucca Property Tax Value of Property Tax
. (in Rs/sqm) Commercial For Commercial on
(area in sq ft) Commercial Land (in Rs.)Commercial
Property (in Building as
Rs.) %age of Land
Value
1 Chikhli Old Basti 1900 250 435 44129 0.99%
2 Dongergarh Road 2100 400 696 78038 0.89%
3 Baputola Road 3400 500 1160 157934 0.73%
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S.No Locality Land Value Pucca Property Tax Value of Property Tax
. (in Rs/sqm) Commercial For Commercial on
(area in sq ft) Commercial Land (in Rs.)Commercial
Property (in Building as
Rs.) %age of Land
Value
4 Chandan Nagar 3600 1000 2900 334448 0.87%
5 Government Press - 4400 1250 4350 510962 0.85%
Gathula Nala
6 Kheragarh Road - 9500 2000 8700 1765143 0.49%
Chikhli PS
7 Imam Chowk - 33000 3000 15660 9197324 0.17%
Overbridge
8 Imam Chowk - Post 61000 4000 23200 22668153 0.10%
Office Chowk
Table 5-4 : Property Tax amount as percentage of Land Values for Residential properties
Property Tax
Property
Land Pucca Value of on
Tax For
Value Commercial Commercial Commercial
Locality Commercial
(in (area in sq Land Building as
Property
Rs/sqm) ft) (in Rs.) %age of Land
(in Rs.)
Value
2 Dongergarh Road 2100 750 2175 146321 1.49%
3 Baputola Road 3400 1000 2900 315868 0.92%
4 Chandan Nagar 3600 1250 4350 418060 1.04%
Government Press - Gathula
5 4400 1500 5220 613155
Nala 0.85%
6 Kheragarh Road - Chikhli PS 9500 2000 8700 1765143 0.49%
7 Imam Chowk - Overbridge 33000 2500 10875 7664437 0.14%
Imam Chowk - Post Office
61000 3500 20300 19834634
8 Chowk 0.10%
From Table 5-4 and Table 5-5 above it is seen that when the existing property tax on annual letting value for
commercial properties is translated to land value, the properties with lowest land value of Rs. 1900 per sqm is paying
property tax @ 0.99% of the land value whereas the properties with highest land value of Rs. 61000 per sqm is
paying property tax @ 0.1% of the land value. Similarly, when the existing property tax on annual letting value for
residential properties is translated to land value, it is seen that the properties with lowest land value of Rs. 1900 per
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sqm is paying property tax @ 1.31% of the land value whereas the properties with highest land value of Rs. 61000
per sqm is paying property tax @ 0.10% of the land value.
The current system of calculation of letting value is therefore neither buoyant nor equitable. A revision in the letting
value by referencing it with the property values (circle rates) will make it buoyant and equitable i.e. the property
owners with higher property value will pay more tax and property owners with less property value will pay less tax.
This land value based property tax may be fixed at a rate which the owners of least value property are paying. This
will help RMC in increasing its revenue base from property tax significantly.
5.1.2 Cost-Benefit Analysis
The Cost Benefit Analysis is presented in Table 5-5.
Table 5-5: Cost – Benefit Analysis for Property Tax/ Fee

Instrument Name Property Tax/ Fee
Existing Status The property tax at present is charged on annual letting value. This rate for calculating
the annual letting value however is almost same for all the zones in Rajnandgaon.
Potential Value By linking annual letting value to value of land, the annual revenue from property tax
can increase significantly.
Efficiency Property tax when linked to market rentals will ensure buoyancy in the value capture.
Equity Property tax based on prevailing market value will ensure equity.
Adequacy There are approximately 40000 residential properties in Rajnandgaon. If the smaller
plots, say, smaller than 200 square meters estimated to be 8000 (@ 20%) are
excluded, from the levy of Land and Building Tax and estimate average size of the
balance taxable plots numbering 32000 to be 200 square meters each and the
average market price of land to be Rs. 10000/- per square meter (the minimum being
Rs.1900/- per square meter and going up to Rs.61000/- per square meter) an average
plot of 200 square meters would be values at Rs.2000000/- and the annual Land and
Building Tax for each property @ 1% of the market value would come to Rs 20000/-.
Thus collection of Rs. 64 crores from the levy of Land and Building Tax from 32000
properties can be envisaged.
Further there are approximately 2500 commercial properties in Rajnandgaon. With

average market price of land as Rs. 10000/- per square meter and an average plot of
20 square meters, the value of land per commercial property would be Rs.200000/-.
The annual Land and Building Tax for each property @ 1% of the market value would
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Instrument Name Property Tax/ Fee

come to Rs 2000/-. Thus collection of Rs. 0.50 crores from the levy of Land and
Building Tax from 2500 commercial properties can be envisaged.
Manageability Online system for assessment and collection may be introduced to reduce
administrative costs.
Legal Feasibility Chhattisgarh Municipal Corporation Act, 1961
Timelines GIS Mapping of all properties – A Short Term Measure (0-1 years)
Move from area based method to value based method will need amendment in Act –
A Short Term Measure (0-1years).
Introduction of on-line system for demand and collection of property tax may be
targeted in Medium Term (1-3 years).
Remark All the properties to be mapped and linked to GIS.
Any new building to be added to the GIS data base before giving the completion
certificate.
Online system of demand and collection to be introduced.
Concept of common bill for all utilities like water supply, electricity, property tax etc.
may be introduced. Non payment or partial payment of utility bill may attract
disconnection of electricity.
An independent third party may be engaged for demand and collection of utility bill.
5.2 REVENUE POTENTIAL FROM IMMOVABLE PROPERTIES UNDER MCR
List of immovable properties given on lease by MCR has been presented earlier in Section 3.9. Rental income from
municipal properties is through leasing of properties (shops) owned by MCR. During FYs 2015-16 and 2014-15,
MCR has collected Rs. 3.91 crore and Rs. 2.83 crore respectively from leasing of municipal properties. The details of
monthly lease rent earned from some of the sample shops viz-à-viz the market rent is presented in Table 5-6.
Table 5-6: Monthly Lease Rent viz-a-viz Prevailing Market Rent of Shops/ Sheds owned by MCR
Present Prevailing
Total Area Average
Present Monthly Monthly
under Area under
Description No. of Shops Monthly Market Rent Market Rent
Shops (in each Shop
Rent (in Rs.) (in Rs. Per (in Rs. Per
sqft) (in sqft)
sqft) sqft)
Shops at Bus 29 (varying
396.2 12.9 1974 14.2 60
Stand sizes)
Shops at Haat
20 shops 360.0 18 2467 12.7 28
Bazar
Bhawan at
Delhi Gate 12 481.8 36.72 10521 26.6 128
Complex
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Present Prevailing
Total Area Average
Present Monthly Monthly
under Area under
Description No. of Shops Monthly Market Rent Market Rent
Shops (in each Shop
Rent (in Rs.) (in Rs. Per (in Rs. Per
sqft) (in sqft)
sqft) sqft)
Pyarelal
20 shops
Shopping 274.1 14.96 2010 12.5 42
(varying sizes)
Complex
Gol Bazar 22 shops
Shopping (Promoter 392.6 16.4 726 4.1 57
Complex Builder model)
24 shops (3.0
Shopping
x 3.0)
Complex
(Promoter
behind 297 9 789 8.1 124
Builder model)
Sarvedas
25 Gumti (1.8
School
x 1.8)
Shops on
South of Town 38 shops 423.8 11.15 1021 8.5 58
Hall
Shops on East
18 shops 321.2 17.84 1021 5.3 42
of Town Hall
Commercial
Complex in
7 shops 145.5 20.79 5500 24.6 89
front of Putri
Shala
Bhawan at
Putri Shala
9 shops 187.1 20.79 1021 4.6 89
Shopping
Complex
Shops near
Gudakhu Line 13 shops 120.8 9.29 790 7.9 150
Dispensary
Tankaghar
Shopping 31 shops 561.8 18.12 1010 5.2 33
Complex
Jaistambh
18 shops 401.5 22.30 995 4.1 63
Chowk
It is seen that generally the revenue from municipal properties is very low as compared to the revenue generated by
other comparable privately-owned properties. It is understood that the shops are leased by MCR through auction.
The lease period generally is 10 years and the lease agreements has variable provisions for escalation.
It is suggested that for auction the minimum reserve price is kept at 80% of the prevailing market rentals in that area
and the lease agreement should have annual escalation clause of 10% to 15%. On the expiry of the lease period the
reserve price should again be looked at for necessary corrections in comparison to the prevailing market prices. In
the re-auction, the out-going lessee may be provided with the first right of refusal on the lease amount offered during
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the re-auction. This process will ensure bouyancy in the lease rents.
A broad analysis of the potential revenue to MCR from above mentioned approach for a sample number of shops is
presented in Table 5-7
Table 5-7: Potential Revenue from Shops under MCR

Present Potential Annual
Total Area Present Prevailing
Monthly Revenue from all shop
under Annual Monthly Market
Description Market Rent @ 80% of Prevailing
Shops (in Revenue Rent (in Rs. Per
(in Rs. Per Market Rent (in Rs
sqft) (in Rs. Lakh) sqft)
sqft) Lakh)
Shops at Bus
396.2 14.2 0.675 60 2.28
Stand
Shops at Haat
360.0 12.7 0.549 28 0.97
Bazar
Bhawan at Delhi
481.8 26.6 1.538 128 5.92
Gate Complex
Pyarelal
Shopping 274.1 12.5 0.411 42 1.11
Complex
Gol Bazar
Shopping 392.6 4.1 0.193 57 2.15
Complex
Shopping
Complex behind 297 8.1 0.289 124 3.54
Sarvedas School
Shops on South
423.8 8.5 0.432 58 2.36
of Town Hall
Shops on East of
321.2 5.3 0.204 42 1.30
Town Hall
Commercial
Complex in front 145.5 24.6 0.430 89 1.24
of Putri Shala
Bhawan at Putri
Shala Shopping 187.1 4.6 0.103 89 1.60
Complex
Shops near
Gudakhu Line 120.8 7.9 0.115 150 1.74
Dispensary
Tankaghar
Shopping 561.8 5.2 0.351 33 1.78
Complex
Jaistambh Chowk 401.5 4.1 0.198 63 2.43
TOTAL 5.487 28.40
Note: The market rents are based on market assessment.
From the above table 5-7, it is seen that if the lease rent for the municipal properties is made comparable to the
prevailing market rentals there is a potential of increasing the annual revenue from the Rentals from above
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showcased properties to Rs. 28.40 lakh per annum against the existing revenue of Rs. 5.48 lakh. This approach if
scaled up to all the municipal properties which are currently contributing to annual revenue of Rs. 3.91 crore, there is
a potential to increase the annual revenue to almost Rs. 20 crore.
In line with the Terms of Reference, the Cost Benefit Analysis in terms of existing status, potential value, efficiency,
equity, adequacy, manageability, legal feasibility, timelines (short, medium, long) and general remarks is presented
in Table 5-8.
Table 5-8 : Cost – Benefit Analysis for Leasing of Immovable Properties of MCR
Instrument Name Leasing of Immovable Properties of MCR
Existing Status Shops are given on lease by MCR. The lease rents however are much less as
compared to the prevailing market rents.
Potential Value The annual lease rent potential could be around Rs. 20 crore against existing revenue
stream of approximately Rs. 4.0 crore.
Efficiency Lease rents when linked to market rentals will ensure buoyancy in the value capture.
Equity Lease rents based on prevailing market value will ensure equity for any lessee.
Adequacy The revenue potential of Rs. 20 crore from lease rent will increase the share of
revenue from rentals from the current level of approximately 1.45% substantially in
coming FYs.
Manageability Lease rents are collected on monthly basis according to the conditions laid in the
lease agreement. Require manpower for collection thereby incurring administrative
costs. Online system for collection of lease rent may be introduced to reduce
administrative costs.
Legal Feasibility Chhattisgarh Municipal Corporation Act, 1956
Timelines Any new leasing should be worked out based on prevailing market rents – A Short
Term Measure (0-1 years).
Introduction of on-line system for collection of lease rent may be targeted in Medium
Term (1-3 years).
Remark Effective tool to increase revenue of MCR.
5.3 BUILDING PERMISSION FEE
The Building Fee in Rajnandgaon is charged as under:
(a) For residential development @ Rs. 11 – Rs. 30 per sqm
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(b) For commercial building @ Rs. 16.5 – Rs. 45 per sqm.
The above method is area based and does not take into account the market value of the underlying asset, hence
fails to capture value though there is a provision of 10% increase every year.
The average circle rate of land in Rajnandgaon varies from Rs. 1,900 per sqm to Rs. 61,000 per sqm. The averaged
out building fee rate for residential development works out at Rs. 20 per sqm while that for commercial development
works out at Rs. 30 per sqm.
An analysis of land values in different localities of Rajnandgaon vis-à-vis current building permission fee for same
size of property is presented in Table 5-9:
Table 5-9 : Building Permission Fee amount as percentage of Land Values

Building
Building
Area of Value of permission
Land Value permission
Locality property Land (in charge as
(in Rs/sqm) fee
(area in sq ft) Rs.) %age of
@Rs.20
Land Value
2 Dongergarh Road 2100 1200 2230 234114 0.95%
3 Baputola Road 3400 1200 2230 379041 0.59%
4 Chandan Nagar 3600 1200 2230 401338 0.56%
5 Government Press - Gathula Nala 4400 1200 2230 490524 0.45%
8 Imam Chowk - Post Office Chowk 61000 1200 2230 6800446 0.03%
This analysis reflects that the Building Fee on low valued plots is multiple times higher than the plots which are high
valued. Therefore, the area based rates are iniquitous and results in loss of substantial revenue. It is therefore
suggested to charge the Building Fees based on the land value without increasing the total liability for the citizen
who holds plots with lesser market value. This can be done by applying the effective rate of Building Fee as a
percent @ 1.05% of notified land rate applicable to the lowest land rate (Rs. 1,900/- per sqm) to all land parcels.
During the FY 2015-16, RMC collected INR 9.79 lakh from building fee. Going by the analysis as presented in the
previous para, the potential revenue can be enhanced by 7 to 8 times thereby resulting in potential revenue of about
INR 75 lakh to INR 100 lakh per annum from Building Fee.
Similarly, the rates of land development approval fees @ Rs.50/-per acre and fees for development of colony @
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Rs.50000/- per hectare, based on per acre /hectare of plot area look easy to understand and administer but the
same are not equitable as the same are more (in terms of percentage of land value) for the land parcels which have
less market value. Moreover, the area based rates are not buoyant as they do not keep pace with increase in value
of land. This results in loss of potential revenue. Moreover, whenever the rates are sought to be revised in line with
rise in market value, it requires amendment of Law/Rules which is a lengthy legislative procedure. If the rates are
linked to land value, the same would automatically keep pace with change in the notified land rates and no
amendment of law/rules will be required.
Table 5-10: Cost – Benefit Analysis for Building Permission Fee

Instrument Name Building Fee/ Construction Fee
Existing Status The Building Permission Fee is charged for new constructions under the provision of
the Chhattisgarh Bhumi Vikas Rules, 1984
Potential Value The annual incremental revenue potential of 7 to 8 times by moving from area based
method to value based method.
Efficiency Building fee when linked to market rentals will ensure buoyancy in the value capture.
Equity Building fee based on prevailing market value will ensure equity.
Adequacy The annual revenue potential could be INR 75 lakh to INR 100 lakh.
Manageability Building Permission Fee is collected upfront. Online system for collection of building
construction fee may be introduced to reduce administrative costs.
Legal Feasibility Chhattisgarh Bhumi Vikas Rules, 1984
Timelines Move from area based method to value based method will need amendment in Act –
A Short Term Measure (0-1 years).
Introduction of on-line system for collection of building construction fee may be
targeted in Medium Term (1-3 years).
Remark Effective tool to increase revenue of ULB.
5.4 Development Charges
States like Andhra Pradesh, Gujarat, Maharashtra, Tamil Nadu and Madhya Pradesh levy Impact Fee and collect it
upfront while granting development permissions. In Hyderabad, the Impact Fee is charged based on the width of the
road abutting the property and it varies from Rs. 200/- to Rs. 400 per sq ft on total built up area. It is legally backed
by Andhra Pradesh Urban Areas (Development) Act, 1975 and under Special Development Regulations.
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Development charges are levied in Chhattisgarh backed by the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam,
1973, Section 59.
The Development Charges (including Nagar Sudhar Shulk and Vikas Shulk) in Rajnandgaon are currently levied at
INR 6.5 per sqft on built up area for all type of developments / properties. The method of calculation of development
charges does not consider the market value of the underlying asset, hence fails to capture value. The method also
lacks buoyancy.
An analysis of currently charged Development Charges as a percentage of value of underlying asset is presented in
Table 5-11 below.
Table 5-11: Analysis of currently charged Development charges as a percentage of value of underlying asset
Building
Devlopment
Land Average Value of permission
charge
Locality Value (in building Land (in charge as
@Rs.6.5 per
Rs/sqm) area (sq ft) Rs.) %age of Land
sqft
Value
2 Dongergarh Road 2100 1200 7800 234114 3.33%
3 Baputola Road 3400 1200 7800 379041 2.06%
4 Chandan Nagar 3600 1200 7800 401338 1.94%
Government Press - Gathula
5 4400 1200 7800 490524
Nala 1.59%
Imam Chowk - Post Office
61000 1200 7800 6800446
8 Chowk 0.11%
From the table 5-11 it is seen that the development charges are non-equitable. Property owners with least property
value are exposed to highest development charges.
Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 provides for levy of Development
charges. Section 59 (1) states that where as a result of the implementation of town development scheme, there is, in
the opinion of the Town and Country Development Authority, as appreciation in the market values of lands adjacent
to and affected by a scheme the Town and Country Development Authority may, in lieu of providing for the
acquisition of such land, levy development charges on owners of such land. Sub-section 59(2) lays down the rate for
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levying development charges. It states that the development charges shall be an amount equal to not less than
one-fourth and not more than one-third of the difference between the value of the land on the date of publication
of the intention to prepare the town development scheme and the date of completion of the scheme.
The provision in the Act is linked to the value of the land however the implementation at present is based on area
based method. In order to effectively capture land value increment, create buoyancy and equity, it is recommended
to transition from the current area based development charges to value linked charges.
Table 5-12: Cost – Benefit Analysis for development charges

Instrument Name Development charge
Existing Status Charged along with the building permission fee
Potential Value If charged as per Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh
Adhiniyam, 1973 @ an amount equal to not less than one-fourth and not more than
one-third of the difference between the value of the land on the date of publication of
the intention to prepare the town development scheme and the date of completion of
the scheme, the revenue potential for the ULB is substantial
Efficiency Development charges when linked to market rentals will ensure buoyancy in the value
capture.
Equity Development charges based on prevailing market value will ensure equity.
Adequacy The revenue potential could be sizeable.
Manageability Development charge is collected upfront along with building permission fee. Online
system for assessment and collection may be introduced to reduce administrative
costs.
Legal Feasibility The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973, Section 59
Timelines Move from area based method to value based method – A Short Term Measure (0-1
years).
Introduction of on-line system for collection of development charges may be targeted
in Medium Term (1-3 years).
Remark Effective tool to increase revenue of RMC.
5.5 Premium on Relaxtion of Rules or Additional FSI/FAR
Sale of additional FSI is a planning and fiscal tool whereby the Local Planning Authority provides development rights
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in excess of the baseline FSI in exchange of payment of a pre-defined premium. The basic principle behind this
fiscal tool is the separation of property rights and development rights. As a planning tool, premium FSI can be used
effectively for managing the density of urban areas. For example, higher FSI along transport corridors such as metro
lines (Transit Oriented Development) encourages greater use of public transport and prevents urban sprawl.
As a fiscal tool, premium FSI is effective in locations where developable land is scarce or the baseline FSI is low. It
needs to be used judiciously as it serves as a perverse incentive to local authorities to restrict baseline FSI use the
tool for revenue maximisation, often leading to erosion of the legitimate tax base (such as property or land value tax).
More and more States are coming with the policy of saleable FSI/FAR. It is widely used in Maharashtra, Karnataka,
Gujarat and Tamil Nadu to allow for additional development rights beyond the permissible limits in the state town
planning laws and regulations. Nagpur Municipal Corporation (NMC) has adopted a policy of increasing FSI/FAR by
0.3 by paying premium to it. The premium will be charged at the rate of 60% of ready reckoner value for residential
constructions and at the rate of 90% for commercial constructions. Half of the premium collected by NMC will go to
the state government. This policy is only applicable for non-congested areas.
Purchase-able FAR is one the most effective VCF tools for the cities/areas where land values are high. The
instances of unauthorised construction are very high in the city of Rajnandgaon. Hence it represents the need for
regulating and institutionalizing this widely used value capture tool of charging a premium on additional FAR.
Under the Chhattisgarh Municipal Corporation Act, 1956, there is provision of relaxation in compounding the
unauthorized construction and regularization of unauthorized colonies. There are provisions of hefty regularisation
charges on such constructions. However, the Municipal Commissioner has authority to regularize the construction
only if the unauthorised area is 10% of permissible constructed area. In such scenario, the instances of people going
for regularisation are very less. There are regularisation drives by state government under the provisions of
Chhattisgarh Anadhikrit Vikas Ka Niyamitikaran Adhiniyam for regularisation of unauthorised constructions and
colonies beyond the 10% mark. The last such drive was announced in 2014-15, after almost 10 years of previous
such drive in year 2003. The provision of premium for purchasable FAR will also help in curtailment of instances of
unauthorised construction.
5.5.1 Revenue Potential from Premium on relaxation of rules or additional FSI/FAR
Purchase-able FAR is one the most effective VCF tools for the cities/areas where land values are high. The
instances of unauthorised construction are very high in the city of Rajnandgaon. Hence it represents the need for
regulating and institutionalizing this widely used value capture tool of charging a premium on additional FAR. The
base FAR in Rajnandgaon is 1.5. It is suggested to provide for a sell-able FAR up to additional 0.25. There are
approximately 40000 houses in Rajnandgaon. The total area under the houses @ 200 sqm per house works out at
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8.0 million sqm. If 5% house owners go for purchase-able FAR of 0.25, this would result in selling of 100000 sqm of
area under additional FAR. The average circle rate for plots in Rajnandgaon works out at Rs. 8000 to Rs. 10000 per
sqm and if the purchasable FAR is charged at 50% of prevailing circle rate this would result in potential revenue of
Rs. 40.0 crore to Rs. 50 crore.
Table 5-13: Cost – Benefit Analysis for purchasable FAR

Instrument Name Premium on Relaxation of Rules or Additional FSI/FAR
Existing Status In Chhattisgarh there is no provision in any Act for charging any premium or fees for
grant of any additional FSI. Section 24A of the Chhattisgarh Nagar Tatha Gram
Nivesh Adhiniyam, 1973 provides for construction of an additional floor in a residential
building. Section 358 of The Chhattisgarh Municipal Act,1961 confers Power on the
Municipality to make bye-laws governing height of buildings; the number and height of
storey's.
Potential Value The revenue potential could be Rs. 40 crore to Rs. 50 crore.
Efficiency Through the use of additional FAR as a fiscal tool, the planning authority can
efficiently incentivise vertical development and prevent urban sprawl. Doing this
through market-based incentives is far more efficient then doing the same through
strict development restrictions as the letter is prone to non-compliance.
Equity The charge is equitable as cost of FAR is linked with the property value
Adequacy The revenue potential could be Rs. 40 crore to Rs. 50 crore.
Manageability Development charge is collected upfront along with building permission fee. No
additional cost is required to manage.
Legal Feasibility Can be introduced either in Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973
or The Chhattisgarh Municipal Act,1961.
Timelines Require concurrence from State Legislative Assembly – A Medium Term Measure (1-
3 years).
Remark Effective tool to increase revenue of ULB and will also help in curtailing the practice of
unauthorised construction.
5.6 Revenue from Street Vendors
The street vendors in Rajnandgaon were charged a fee of Rs. 2 per day before it was abolished in 2002. At present
vending fee of Rs. 30 per month is charged from registered vendors of ‘haat bazaar’ i.e. municipal market. A fee
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called as ‘Asthai Dakhal Shulk’, of Rs. 30 per day is charged from other vendors which are not registered. Due to
inadequate manpower at their disposal, Municipal Corporation however is unable to collect this fee on daily basis.
The estimated number of street vendors in Rajnandgaon @ 2% of 163114 – population as per census 2011, works
out approximately at 3260. Bhadoria Chowk, Mahamaya Basantpur Chowk, Nandai Chowk, Old Bus Stand,
Basantpur Stadium Road, Haat Bazar Chowk, Indira Nagar Chowk, Zila Aspatal (District Hospital), Post Office to
Railway Station, etc are the prominent locations for street vendors. It is felt that there should be a system in place to
regulate street vending. For this purpose, the Municipal Corporation should register all the vendors in the city at a
nominal fee to be decided by the ULBs based on any reliable means of identification. Registration should be
renewed after every three years.
The vendors could be charged a monthly fee for access to various services. There should be direct linkage between
the ULBs and hawkers for collection of:
• Registration fee
• Monthly maintenance charges – differentiated according to location/type of business
• Fines, for delayed payments and violations
Based on the data collected during the survey of vendors in 2014 for Durg town, it was observed that the average
monthly income of street vendor is approximately Rs. 5500/- per month. If Rajnandgaon Municipal Corporation fix the
monthly maintenance charges at Rs. 50/- (approximately 1% of average monthly income), the potential annual
revenue could be Rs. 1.63 lakh. At 2% i.e. at a rate of Rs. 100/- per month, the potential annual revenue for the ULB
could be Rs. 3.25 lakh.
5.7 Revenue from Parking
Provision of organized and controlled parking spaces is a big challenge in Rajnandgaon. The space below flyovers
and shoulders can be used for organized paid parking at locations viz.
• Vivekanand Nagar to Dr. Bheem Rao Ambedkar Chowk
• Digvijay Stadium to District Court
• Guru Nanak Chowk to Mahavir Chowk
• Mahavir Chowk to Bhagat Singh Chowk
• Bhagat Singh Chowk to Post Office Chowk
Recently the stretch betwwen Post Office Chowk to City Kotwali Chowk has been auctioned for organized and
controlled parking to a private vendor on a yearly fixed charge of Rs. 2,85,320/-. The current parking charges are as
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under:
• Two wheelers – Rs. 10
• Four wheelers – Rs. 20
• Loading/ Un-loading vehicles – Rs. 50
• Cycles – Rs. 5
On similar line the stretches mentioned above can be auctioned, say at Rs. 2,00,000 per year. This could give the
Municipal Corporation an additional revenue of Rs. 10 lakh per year and would also solve the parking issues within
the city to some extent. Further the ULB should also explore levying of parking charges based on duration of
parking. The basic minimum parking charges may be be defined for two hour duration and post that it should get
enhanced for every two hours duration.
The ground of Municipal school which has ECS of 50 to 55 is also used for parking. This parking however
is not charged. The Municipal Corporation may impose a parking fee on this facility.
5.8 Stakeholder Consultations
The consultant team carried out consultations with the officials from Municipal Corporations Durg, Bhilai,
Rajnandgaon, Bilaspur, Korba, Ambikapur, Raigarh and Jagdalpur as well as officials from SUDA on various VCF
tools and their applicability in the context of respective municipal corporations. The VCF tools as given in the
National VCF Policy Framework prepared by MoHUA were discussed in detail. The current provisions of land based
taxes and user charges were discussed. Opinion on various possibilities to increase the revenue base from land
were given and discussed. The analysis presented above is based on these consultations.
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CHAPTER 6:
IMPLEMENTATION FRAMEWORK
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6 IMPLEMENTATION FRAMEWORK
6.1 IDENTIFICATION OF CLAUSES TO BE AMENDED
6.1.1 Rationale for Change in Area Based Rates of Building Related Fee
Rule 12. Form of application for permission for development of land by others –
(A) Any person not being the Union Government, State Government, or Local Authority, special authority shall
apply under the sub-section (1) of section 20 in Form VII for permission for development of land and in Form
VIII for development of land along with the schedule and specification sheet attached with the application
form. (B) Fees. – Every application submitted under sub-section (2) of section 29 shall be accompanied by a
fee specified below:
(iii) For the development of land other than erection of a building Rs. 50 per acre or part thereof.
(iv) For building operation.
S.No. Area Rate of Fee for ground Rate of fee for

floor subsequent storey
I For a ground floor area up to 1200 sq.ft Rs.20/- Rs.15/-per storey
Ii For a ground floor area of more than Rs.25/- Rs.20/-per storey
1200 sq.ft. but not exceeding 3000 sq.ft.
Iii For a ground floor area of more than Rs.50/- Rs.40/-per storey
3000 sq.ft. but not exceeding 6000 sq.ft.
Iv For a ground floor area more than 6000 sq.ft. & Rs.75/- Rs.50/-per storey
above.
Note 1- For purposes of calculation of the fee ground area shall mean the area of the portion which is proposed to be
built upon excluding the internal court yard and portion.
Note 2- For purposes of rates prescribed above the basement where provided will be regarded as the first storey, the
ground floor over the basement as the second storey and so on.
As elaborated in Section 5.2 of Chapter 5, the area based rates towards Building Plan Sanction Fees as given
above, are not buoyant as the same are not designed to keep pace with any changes in the land values. To
bring in buoyancy and to make the fee rates equitable it is necessary to link the fee rate with the prevailing
land prices.
In Chhattisgarh, the compounding fee for regularization of unauthorized construction is based on value of the
property thus relating the fee and levies to value of the property is not new in Chhattisgarh. Linking building
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plan sanction fee to prevailing land prices will ensure automatic increase in rates and obviate the need for
revision of rates which requires a lengthy process. The land rates however should be regularly monitored and
revised annually as is done for stamp duty purpose.
Similarly, the rates of land development approval fees @ Rs.50/-per acre and fees for development of colony
@ Rs.50000/- per hectare, based on per acre /hectare of plot area look easy to understand and administer
but the same are not equitable as the same are more (in terms of percentage of land value) for the land
parcels which have less market value. Moreover, the area based rates are not buoyant as they do not keep
pace with increase in value of land. This results in loss of potential revenue. Moreover, whenever the rates
are sought to be revised in line with rise in market value, it requires amendment of Law/Rules which is a
lengthy legislative procedure. If the rates are linked to land value, the same would automatically keep pace
with change in the notified land rates and no amendment of law/rules will be required.
The need to change the unjust and iniquitous rates of fees is also mandated by the provisions of Section 131
of the Chhattisgarh Municipal Act 1961 which are elucidated in next section.
6.1.2 Power of Government to abolish, suspend or reduce the amount or rate of any tax under the
Chhattisgarh Municipalities Act, 1961.
Section 131 of The Chhattisgarh Municipal Act,1961 - Power of State Government in regard to relief in taxes,
if, on a complaint made to it or otherwise, it appears to the State Government that any tax levied by a Council
is unfair in its incidence or that such levy or any part thereof is obnoxious to the interest of the inhabitants of
the Municipality, it may, by an order, require the Council to remove the objections to any such tax within such
time as may be specified, therein, and on the failure of Council to comply with the order within the time so
specified to the satisfaction of the State Government the State Government may, by notification and subject to
such conditions or restrictions as may be specified therein, abolish, suspend or reduce the amount or rate of
any tax.
The case for a change from area based development charges to value based development charges is
supported by the example of Mumbai. It could be presented to illustrate the magnitude of benefits that might
accrue if value based rates are adopted. The rate of development charge under the Maharashtra Regional
and Town Planning Act prevalent since 1992 till 2010 in Mumbai was Rs. 350 per sq.m for residential or
institutional use. It was 1.5 times for industrial uses and 2 times for commercial uses. This rate in 2009-10
was less than 0.11 to 0.58% of the then notified rates of market value of land. The revenue earned on account
of development charge in 2007-08, 2008-09 and 2009-10 was Rs. 61.44, Rs. 87.13 and Rs. 132.8 cores
respectively. As the rates remained unchanged the growth in revenue was purely on account of physical
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expansion of development area. In 2010 the rate was changed from area based rates to value based rate of
2.5% of land value as determined in the Ready Reckoner which are applicable for charging stamp duty on
transfer of property. As a consequence, the development charge revenue increased to Rs. 225.1 cores in
2010-11 and to Rs. 306.9 cores in 2011-12. Moreover, Jantri rates are generally lower than the real market
rates. If the Jantri valuation is improved to reflect real market rates, the revenue could be substantially higher.
6.1.3 Rationale for change in Rates of Premium on diversion of land use under The Chhattisgarh Land
Revenue code, 1959 (Rules regarding Alteration of Assessment and Imposition of premium for the
purpose of levy of premium on Agricultural land)
Rule 14.(1) of the Rules regarding Alteration of Assessment and Imposition of Premium for the purpose of
levy of premium on agricultural land provides that for the purpose of levy of premium of agricultural land
diverted to non-agricultural purposes, in any town and village in the State of Chhattisgarh shall be divided into
the following classes as shown in column (1) of Schedule-A appended to these Rules and the premium shall
be imposed according to the rates specified in column (2), (3), (4), (5), (6), and (7) of the said Schedule.
Schedule-A
Purpose Unit/Colony/ or Institutional Facility
Project Industrial Purpose
Purpose
Municipal Rs.15/- per Rs.20/- per Rs.25/- per Rs.20/- per Rs.20/- per Rs.15/- per
Corporation and sqm sqm sqm sqm sqm sqm
Nagar Palika
Area
5 km within Rs.10/- per Rs.15/- per Rs.20/- per Rs.15/- per Rs.15/- per Rs.10/- per
Municipal sqm sqm sqm sqm sqm sqm
Corporation and
Nagar Palika
Area
The area based rates of Diversion Premium as given above, are not buoyant as the same are not designed
to keep pace with change in the land values. Therefore, the rates need to be made land value based as a
percent of land rate for sale/purchase. Linking fee rates to prevailing land prices will ensure automatic
increase in rates and obviate the need for revision of rates which requires a lengthy process. The land rates
however should be regularly monitored and revised annually as is done for stamp duty purpose.
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Moreover the area based rates of Diversion Premium are unjust and iniquitous as the same when
translated to percentage of land value works out relatively higher for land parcels with low market value.
For instance, the Diversion Premium @ Rs.25/- per square meter for land in Chikli Old Basti will work out to
1.32% {(25*100)/(1900)} of the market value of land of Rs.1900/- per square meter. However in case of Post
Office Chowk – Gauri Shanker Petrol Pump area where the land rate is Rs.21000/- per square meter, the
Diversion Premium will come to only 0.12% of the market value of land. Therefore, the area based rates are
iniquitous and results in loss of substantial revenue. It is therefore suggested to charge the Diversion
Premium based on the land value without increasing the total liability for the citizen who holds plots with
lesser market value. This can be done by applying the effective rate of Diversion Premium as a percent @
1.32% of notified land rate applicable to the lowest land rate (Rs. 1900/- per sqm) to all land parcels.
The case for a value based levy of charges for change of land use is supported by practice in other states like
Rajasthan where, in exercise of powers conferred by sub-section (I) of Section 74 and Section 73-B of the
Rajasthan Urban Improvement Act, 1959, the State Government of Rajasthan made the rules called the
Rajasthan Urban Improvement (Change of use of Residential Land or Premises for Commercial Purposes)
Rules, 1974. Rule 5 (1) of these Rules provides that the State Government shall consider recommendation of
the Collector and may allow the change of the use of residential land and/or premises of the applicant to
commercial purpose subject to the payment of conversion charges subject to Rule 5(2) which provides that
the applicant shall pay the following conversion charges:
a. Where the change of use is in respect of land and/or premises with full proprietary rights - 75% of the
appreciated value of such land and/or premises subject to a maximum of Rs. 200/- per sq. yard if such
change of use is only for hotel purpose and Rs. 100/- per yard if the change of use is only for cinema
purpose.
b) Where the change of use is in respect of land or premises with lease hold rights 5% of the appreciated
value of such land/or premises which shall be subject to revision every 15th year in the first instance
and every 10th year later on and the amount of upward revision shall at each state be not less than
24% but shall not exceed Rs. 200 per sq. yard if such change of use is only for hotel purpose and Rs.
100/-per sq. yard if the change of use is only for cinema purpose.
However, the rates of conversion charges @ 75% of the appreciated value of land and/or premises converted
to commercial use under The Rajasthan Urban Improvement (Change of Use of Residential Land or Premises
for Commercial Purposes) Rules, 1974, has been capped at the maximum of Rs. 200/- per square yards for
Hotels and at Rs.100/- per square yards for cinemas, but it remains on the higher side for others.
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Conversion fee under the Chandigarh Conversion of Land Use of Industrial sites into Commercial activity
/services in industrial area, phase-I and phase-II, Chandigarh Scheme 2005 (published in gazette dated
19/09/2005) under Capital of Punjab (Development and Regulation) Act,1952 was declared under Clause 6(ii)
to be 50% of the average price of the commercial sites fetched in the auctions held in the last 3 years.
6.1.4 Rationale for enacting Law/Rules for levy of Conversion charges on change of land use in urban
areas from residential to commercial / industrial use and for sub-division, and amalgamation of plots:
The Chhattisgarh law provides for charging premium for permitting diversion of agricultural land from
agricultural land use to non-agricultural land use and provides for different rates of premium to be charged for
diversion of agricultural lands for different categories of land use i.e. residential land use, colony use,
commercial land use / industrial land use, institutional use ,SEZ use or Medical facility land use .The rates in
Municipal Corporation and Nagar Palika Area range from Rs.15/- per square meter for residential and medical
land use to Rs.20/- per square meter for colony project, institutional land use and SEZ land use to Rs.25/- per
square meter for commercial /industrial land use. However, in Chhattisgarh there is no provision for charging
fees for change of land use or land conversion / diversion from residential use to other non-residential uses in
urban areas under the relevant Acts like the Municipalities Act, the Development Act and the Housing Board
Act. Many other states like Rajasthan provide for the same.
Section 166 (1) of the Rajasthan Municipalities Act. 2009 provides for Declaration of Development Areas. The
Municipality may, with the approval of the State Government and by notification in the Official Gazette,
declare any area in the city to be a development area for the purposes of this Act. Under section 166 (2) - on
or after the date on which notification under subsection (1) is published in the Official Gazette, no person shall
institute or change the use of any land or carry out any development of land without the permission in writing
of the Municipality.
Section 171 (1) of the Rajasthan Municipalities Act, 2009 deals with Sanction for sub-division of plot or lay
out of Private Street. Every person who intends to sub-divide his land or his plot or make or lay out a private
street on such land or plot on or after the date of the operation of plan under Section 161 shall submit the
intended layout plan for such purpose together with such particulars and such fees, as may be determined by
bye -laws or by Government Orders, to the Municipality for sanction.
Section 177 (1) of the Rajasthan Municipalities Act,.2009 provides for restrictions on use and development of
land after declaration of a Scheme. On or after the date on which a draft scheme is published under section
174, no person shall, within the area included in the project or scheme, institute or change the use of any land
or building or carry out any development, unless such person has applied for and obtained the necessary
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permission for doing so from the Municipality in accordance with the bye-laws made in this behalf:
Section 182 of the Rajasthan Municipalities Act, 2009 states that there is restriction on change of use of land
and it is only within the power of the State Government to allow change of use of land. Section 182 (1)
lays down that No person shall use or permit the use of any land situated in any municipal area, for the
purpose other than that for which such land was originally allotted or sold to any person by the State
Government, any Municipality, any other Local Authority or any other body or authority in accordance with any
law for the time being in force or, otherwise than as specified under a Master Plan, wherever it is in operation.
Section 182 (2) further states that in the case of any land not allotted or sold as aforesaid and not covered
under sub-section (1), no person shall use or permit the use of any such land situated in a municipal area for
the purpose other than that for which such land was being used on or before the commencement of this Act. It
is section 183 (3) which permits the state government to allow change of use. It states that
Notwithstanding anything contained in sub-section (1) or sub-section (2), the State Government or any
authority authorized by it by notification in the Official Gazette, may allow the owner or holder of any such land
to have change of use thereof, if it is satisfied so to do in public interest, on payment of conversion charges
at such rates and after inviting and hearing objections from the neighborhood in such manner as may be
prescribed with respect to the following changes in use, namely:
a) from residential to commercial or any other purpose; or
b) from commercial to any other purpose; or
c) from industrial to commercial or any other purpose; or
d) from cinema to commercial or any other purpose; or
e) from hotel to commercial or any other purpose; or
f) from tourism to commercial or any other purpose; or
g) from institutional to commercial or any other purpose:
Provided that rates of conversion charges may be different for different areas and for different purposes.
Where the State Government or any authority authorized by it under sub-section (3), is satisfied that a person
who ought to have applied for permission or regularization under this section, has not applied and that such
permission can be granted or the use of land can be regularized, it may proceed to determine the conversion
charges after due notice and hearing the party or parties and the charges as may be prescribed, shall become
due to the Municipality and be recoverable under sub-section (6). The Municipality may hold camps for
expediting this work and take the assistance of any agency as well: Provided that regularization of land use
change shall not be permitted in cases where the original land use was for a public purpose such as
education, medical or any charitable purpose and the allotment was made at any concessional rate unless the
difference in the original rate of allotment and the prevailing is paid and specific consent of the authority which
made the original allotment has been obtained.
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The Rajasthan Urban Improvement (Change of Use of Residential Land or Premises for Commercial
Purposes) Rules, 1974 lay down the rates for conversion charges for change of land use. The same are
briefly given below:
1) Rule 5 (2) of The Rajasthan Urban Improvement (Change of Use of Residential Land or Premises for
Commercial Purposes) Rules, 1974 lays down that the applicant shall pay the following conversion
charges:
a) Where the change of use is in respect of land and/or premises with full proprietary rights - 75% of
the appreciated value of such land and/or premises subject to a maximum of Rs. 200/- per sq. yard
if such change of use is only for hotel purpose and Rs. 100/- per yard if the change of use is only
for cinema purpose.
b) Where the change of use is in respect of land or premises with lease hold rights 5% of the
appreciated value of such land/or premises which shall be subject to revision every 15th year in the
first instance and every 10th year later on and the amount of upward revision shall at each state be
not less than 24% but shall not exceed Rs. 200 per sq. yard if such change of use is only for hotel
purpose and Rs. 100/-per sq. yard if the change of use is only for cinema purpose.
The Rajasthan Unified Building Bye-laws 2017 applicable to entire State prescribe the current fee for allowing
sub-division / reconstitution of plots on covered area of plot as under:
a. Sub-division: Rs. 50/- per sqm.
b. Reconstitution of plot: Rs 100/- per sqm.
Section 73-B of the Rajasthan Urban Improvement Trust Act, 1959 also provides for Restriction on change of
use of land and power of State Government to allow change in use of land. Under section 73-B (2),
notwithstanding anything contained in Sub-section (1), the State Government or any authority authorized by it,
by notification in the Official Gazette, may allow the owner or holder of any such land, to have change of use
thereof, if it is satisfied so to do in public interest, on payment of conversion charges at such rates and in
such manner as may be prescribed with respect to the following changes in use:
a) from residential to commercial or any other purpose; or

b) from commercial to any other purpose; or
c) from industrial to commercial or any other purpose; or
d) from cinema to commercial or any other purpose; or
e) from any existing permissible use of land to any other purposes, as the State Government may
prescribe.
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It is also provided that rates of conversion charges may be different for different areas and for different
purposes. As per Government of Rajasthan, Urban Development Department Notification No. P.3(50)/n v
v/03/2012 dated 21/09/2012 issued under section 90A (4) of Rajasthan Land Revenue Act,1956 read with
Rajasthan Urban Areas (Conversion of agricultural lands into non-agricultural uses and allotment) Rules
2012, conversion charges called Premium per square yards in Jaipur Development Authority area (except Lal
Kothi scheme, 200 feet strip on both sides of JLN Road and Prithviraj Nagar scheme) the rates of premium
are as under:
Residential
• Upto 200 sq. yards within Corporation area = Rs.150/- per sq. yard
• More than 200 sq. yards within Corporation area = Rs.200/- per sq. yard
• Group Housing within Corporation area = Rs.150/- per sq. yard
Commercial
• Up to 200 sq. yards within corporation area = Rs.600/- per sq. yard
• More than 200 sq. yards within corporation area = Rs.800/- per sq. yard
These rates were valid up to 31/03/2014 and thereafter additional 5% per year. Also these rates would be
increased by 10% for corner plots and plots on roads with 60 feet or more width.
6.1.5 Rationale for change in Rates of Betterment Charges under the Chhattisgarh Griha Nirman Mandal
Adhiniyam, 1972
Section 51 of the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972, Chapter XI provides for Assessment
and Recovery of Betterment Charges. Section 51(1) states that “When by making of housing scheme any
land in the area comprised in the scheme will in the opinion of the Board be increase in value, the Board in
framing the scheme may declare that betterment charges shall be payable by the owner of the land or any
person having an interest therein in respect of the increase in value of land from the execution of the
scheme”.
Section 51(2) of the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972, further states that “Such increase in
value shall be the amount by which the value of the land on the completion of the execution of the housing
scheme, estimated as if the land were clear of the buildings exceeds the value of the land prior to the
execution of the scheme estimated in like manner and the betterment charges shall be one half of such
increase in value”.
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The rate of Development Tax levied by the Municipal Corporation of Faridabad under section 118 of the
Faridabad Municipal Corporation Act, 1994 on increase in land values as a result of execution of development
schemes, is equal to one-half of the increase and in case of Betterment charges levied by the local
Development Authority in Faridabad on the increase in land values as a result of execution of development
schemes it is fixed at one-third of the increase in land values.
Section 62 of the Rajasthan Urban Improvement Trust Act, 1959 gives power to the Improvement Trust to
levy betterment charges, where as a consequence of any scheme having been executed by the Trust in any
area, the value of any property in that area, in the opinion of the Trust, has increased or will increase, the
Trust shall, with the sanction of the State Government, be entitled to levy upon the owner of the property or
any person having interest therein a betterment charge in respect of the increase in the market value of the
property resulting from the execution of the scheme. Such betterment charge shall be an amount equal to
one-fourth of the amount by which the market value of the property on the completion of the execution of the
scheme, estimated as if the property were clear of buildings, exceeds the market value of the property prior to
such execution estimated in like manner.
The rate of levy of betterment charges under all the Acts is, however, dependent upon increase in market
value of land and if there has been no increase in land values in a particular year or for consecutive years
there will be no levy of the betterment charges by the Housing Board or the Improvement Trust or the
Municipal Corporation or the Development Authority and normally there is no provision even for cost recovery
in spite of expenditure having been incurred on betterment of infrastructure in the area except some states
like Goa. The Goa, Daman and Diu Town and Country Planning Act, 1974 provides for establishment of
Development Authorities for urban areas, control on lands and building activity and levy and collection of
contribution for cost recovery of expenditure on schemes for development of infrastructure in a development
area in the city. The Planning and Development Authority has power under the Goa, Daman and Diu Town
and Country Planning Act,1974 to make planning schemes for different areas and to estimate the costs of the
scheme as per provisions of section 86 of the Act and also to collect the costs from the beneficiary plot
owners as Contribution towards costs of scheme under section 88 of the Act. However, the contribution is
limited to cost recovery of the scheme and cannot exceed 1/3rd of the increase in land value as a result of
execution of a scheme. Therefore, the flaw is that in case there is no increase in land values as a result of
execution of the scheme there will be no contribution for cost recovery.
Having this type of uncertain and slippery Tax base is against the principles of having a clear and precise tax
base. No increase in land rates would normally happen either because of liberal policies of the government in
allowing construction of affordable housing by subsidized loans and/or by allowing more FAR which would
cause more burden on infrastructure and civic services needing more funds for construction of additional
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infrastructure. Thus, on the principle that development must pay for development the beneficiaries must pay
for development schemes implemented by the ULBs even if there is no increase in land values. Therefore, it
is suggested that the rates of Betterment Charge leviable by the Housing Board/Municipal
corporation/Development Authority in Chhattisgarh should be made on the lines of Rajasthan Land and
Building Tax which is chargeable @ up to 2% of the market value/circle rates of lands annually but is being
charged @ 0.5% -1% on the market value of lands. Similarly, the Betterment Charge may be levied on all
properties falling in the scheme area except the small plot holders who are the low income group in the city,
by fixing the minimum fees @10% on the market value of lands as notified for stamp duty purposes or 50% of
increase in land value, whichever is more. That will provide the right kind of funds for funding the
strengthening and augmentation of infrastructure for the city.
6.1.6 Rationale for enacting new provisions for levy of Infrastructure development tax on big residential
properties/complexes and on non-residential properties.
The Goa Infrastructure Tax Act, 2009 provides for levy and collection of Infrastructure Tax from big residential
properties admeasuring 101 square meter and above, commercial and industrial properties for providing
infrastructure like water, electricity, roads, sewerage. The logic is very clear that such development of new big
properties /complexes and commercial complexes/properties create substantial additional burden on
infrastructure and following the American principle that development should pay for development and old
property owners should not be made to pay for them, the new big property owners and the non-residential
ones should pay for their infrastructure requirements of new roads, parking needs, power requirements and
transport needs. Therefore there is a good case for levy of Infrastructure Development Tax based on market
value of the new properties and not as a contribution for meeting the actual/estimated costs so as to avoid
legal challenges to ‘cost of the scheme’ and also to build some Infrastructure fund for financing future needs
of infrastructure.
The Infrastructure Tax as charged in Goa as given in the schedule can be termed as the Impact Fee for
providing infrastructure for the new development like water, electricity, roads, sewerage, etc. It is levied under
The Goa Infrastructure Tax Act, 2009 on new development at the time of seeking construction permission.
Section 3 of The Goa Infrastructure Tax Act, 2009 provides for the levy of Tax on Infrastructure on any
construction to be undertaken by any person on any land specified in the Schedule. There shall be levied and
paid a tax on infrastructure at the rates specified in the said Schedule. The Government may, by notification in
the Official Gazette, amend any entry in the Schedule and the Schedule shall be deemed to have been
amended accordingly. Therefore, amendment of the rates is not very difficult and does not require legislative
intervention.
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It also states that where a license for construction has already been issued to any person before the
commencement of this Act, the infrastructure tax shall be levied and paid at the time of the renewal of the
construction license or before the issuance of the occupancy certificate/completion certificate, whichever is
earlier, after carrying out assessment of tax through the Competent Authority under this Act. The tax on
infrastructure shall be assessed and collected by the Competent Authority at the time of approving the
construction plan or at the time of issuing construction license.
It also states that where a building proposed to be constructed is on a land earmarked for commercial
use/zone, the rate of tax applicable thereto shall be as applicable to commercial buildings irrespective of its
use. However where a building proposed to be constructed is in a land earmarked for other use or in zone
other than commercial zone, in any plan in force, such as residential or settlement zone, where commercial
utilization of building is done partly on the ground floor or any other floor, the rate of tax applicable to
commercial buildings shall be charged only to the floor area which is used for commercial purpose while for
other area of the building which is used for residential purpose, the rate applicable to residential building shall
be charged while assessing infrastructure tax.
The Infrastructure Act is not in derogation of other laws. Therefore, the provisions of this Act shall be in
addition to the laws governing the building activities, including The Goa Municipalities Act, 1968, The Goa,
Daman and Diu Town and Country Planning Act, 1974, The Goa Panchayat Raj Act, 1994, The City of Panaji
Corporation Act, 2002 and The Goa (Regulation of Land Development and Building Construction) Act, 2008.
However, in order to ensure the primacy of this Act, it is provided that no Local Authority can issue
construction license to any residential building or a commercial building or an industrial building unless a
person applying for the construction license has paid the infrastructure tax due under this Act, in respect of
such building or structure. Also, no person shall start constructing a building unless the tax payable under this
Act, in respect of such building or structure, has been paid. It is also provided that no local authority shall
issue Occupancy Certificate to any building for which the construction license has been issued before the
coming into force of this Act, unless the person applying for it produces a certificate from the competent
authority that the tax due under this Act has been paid and no person shall occupy any building or part thereof
unless the tax payable under this Act in respect of such building or structure has been paid. The rate of
Infrastructure Tax in Goa is Rs.200/- per sqm for residential, Rs.800/- per sqm for commercial and Rs.250/-
per sqm for industrial building or structure.
It is pertinent to note that in Goa there is no nexus between payment of Infrastructure Tax or Impact fee and
the cost or actual expenditure on provision of infrastructure. Therefore being a Tax and not a fee, it is slightly
different from the Impact fee in USA as it is not charged limited to the cost of the project. The Impact fee in
USA however is charged on new development to finance incremental expansion of on-site infrastructure.
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Impact fee in Andhra Pradesh is levied in order to mitigate the impacts of construction of commercial buildings
that lead to increased traffic necessitating decongestion measures. This fee is levied for the sites abutting
certain important roads having demand for commercial activity.
6.1.7 Rationale for levy of Infrastructure Development Charge as well as of Infrastructure Augmentation
Charge on change of land use/diversion of land use:
The conversion of agricultural lands into non-agricultural use entails not only increase in market value of lands
which is partly shared by the ULBs by levy of conversion charges, it also entails additional demand of modern
infrastructure and additional burden on civic services requiring additional funds for providing additional
infrastructure. Similarly, permission for conversion of residential lands into commercial user not only increases
the market value of such lands which is again shared as conversion charges by the ULBs but also results into
additional burden on civic services and demand for additional infrastructure. Therefore, following the principle
that development must pay for development, the financial impact of the need for additional infrastructure
generated by the change of land use must be compensated by the beneficiaries of change of land use .This
justifies levy of Infrastructure Development Charge on construction on lands converted from agricultural to
residential use and levy of Infrastructure Augmentation Charge on new developments which come up on
lands converted from residential to commercial user.
The Haryana Development and Regulation of Urban Areas Act, 1975 section 2 (hha) defines "Infrastructure
Development Charges" to include the cost of development of major infrastructure projects and section 2 (hhb)
defines "Infrastructure Augmentation Charges" to include the cost of the augmentation of major infrastructure
projects. Section 3 (1) of The Haryana Development and Regulation of Urban Areas Act, 1975 provides that
“Any owner desiring to convert his land into a colony shall, unless exempted under section 9, make an
application to the Director, for the grant of license to develop a colony in the prescribed form and pay for it
such fee and conversion charges as may be prescribed. The Haryana Development and Regulation of Urban
Area Rules, 1976 prescribe the rates in Schedule-A and Schedule-B for Infrastructure Development Charges
and Infrastructure Augmentation Charges respectively. For instance, in Faridabad Complex the development
of colonies by colonizers attracts conversion charges for change of land use as well as payment of
Infrastructure Development Charges and Infrastructure Augmentation Charges. The rates of Infrastructure
Development Charges are given in Schedule –A of the Haryana Development and Regulation of Urban Area
Rules, 1976 which are per square meter ranging from Rs.70/- per square meter in residential category lower
potential zone to Rs.500/- per square meter in residential hyper potential zone. In case of commercial
category, the rates vary from Rs.190/- per square meter to Rs.1000/- per square meter. Similarly, the rates of
Infrastructure Augmentation Charges in Faridabad as given in schedule – B of the Haryana Development and
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Regulation of Urban Area Rules, 1976 are between Rs.0.5 lakh per acre to Rs.5 lakh per acre for residential
land and between Rs. 2 lakh per acre to Rs. 20 lakh per acre for commercial land.
These charges are levied and collected at the time of application for license for laying a colony and issuance
of completion certificate. The areas based rates of Infrastructure Development Charge as well as of
Infrastructure Augmentation Charge as presently levied in Faridabad are iniquitous as these are the same for
owners of lands with less market value as well as for those with higher market value of land. Moreover, these
are not buoyant as the same are not designed to keep pace with rise in land value and the need for buoyancy.
Therefore the rates, if adopted by State of Chhattisgarh, need to be made value based as a percent of land
rate per square meter linked to current land rates. Since the converted lands may fall within the jurisdiction of
the Municipal Corporation or the Development Authority or the Housing Board necessary amendment for
inserting provisions for levy of Infrastructure Development charge as well as of Infrastructure Augmentation
Charge will be required to be made in the three Acts and corresponding Rule and notifications for fixing the
rates.
In Chhattisgarh Rule 8 (1) of The Chhattisgarh Municipal Corporation and Municipalities (Registration of
colonizer, term and conditions) Rules, 2013 captioned “Application for the development of the colony and
permission fee” provides that when a colonizer registered under rule 3 wants to establish any colony and take
up development work, he shall submit an application to the competent authority together with the fee
prescribed under rule 8(2) which is Rs.50000/- per hectare in case of Municipal Corporation having population
of 3 lakh or more and @ Rs.25000/- per hectare in case of Municipal Corporation having population of less
than 3 lakh.
Rule 11 of The Chhattisgarh Municipal Corporation and Municipalities (Registration of colonizer, term and
conditions) Rules, 2013 deals with permission for development work and provides that Permission shall be
granted after fulfilling the following conditions-
a) Out of plots/flats to be developed 15% of plots / 10% of flats shall be reserved for transfer to the
b) Colonizer shall deposit 2% of the estimated cost of internal development cost of the colony as
c) Rupees 100/- per square meter for external development of the colony with the Municipality
d) The rate in (c) relates to 2011 and will increase @5% per year thereafter.
However, it would be better to levy Infrastructure development charges and Infrastructure augmentation
charges based on market value of land on conversion /diversion of land use for development of a colony.
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6.1.8 Rationale for making provision in law for charging Premium on Additional FAR/FSI:
A Betterment levy related Amendment to Jaipur Region Building Regulation 2010 was made as per
Gazette notification dated 20 May 2011 and Additional FAR over and above standard FAR in case of flats will
be sanctioned on payment of betterment levy of Rs.100/- per square feet or 25% of residential land rate,
whichever is more. In case of group housing standard FAR of 1.33 could be exceeded up to 2.25 on payment
of betterment levy @ Rs.100/- per square feet or 25% of land rates, whichever is more. Additional coverage
can be allowed up to 5% on payment of betterment levy on the additional covered area at the same rates. If
the height of the building is more than 30 meter betterment levy @ of Rs.300/- per square feet or 25% of
residential land rates, whichever is more, will be payable on the covered area in the additional height. In case
of commercial use which can be allowed up to 3% of the covered area in group housing, betterment levy on
the commercial use area will be 40% of residential land rate. In case of commercial properties, the additional
covered area will attract betterment levy @ of Rs.200/- per square feet or 25% of reserved land rate for
commercial lands, whichever is more.
The betterment levy in case of additional FAR over and above standard FAR will be a per table below-
Additional FAR above For Residential/ Institutional premises For Commercial premises
2.25
0-1 Betterment levy 30% of residential reserve Betterment levy 30% of
land rate commercial reserve land rate
1-2 Betterment levy 35% of residential reserve Betterment levy 30% of
More than 2 Betterment levy 50% of residential reserve Betterment levy 30% of
Note: In case of Hotels the betterment levy rates will apply in case the FAR is above 3.
Betterment charges for allowing extra FAR were further amended under Jaipur Region Building Regulation
2012 vide Gazette notification dated 07.12.2012 amending Jaipur Region Building Regulations 2010. A New
provision made in para 8.10(8) FAR provided that for more than standard FAR, Betterment Charge will be
payable as per table below:
2.25
0-1 30% betterment levy (On residential reserve 30% betterment levy (On
price) commercial reserve price)
1-1.15 35% betterment levy (On residential reserve 35% betterment levy (On
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2.25
More than 1.15 50% betterment levy (On residential reserve 50% betterment levy (On
A further Amendment was made as per Gazette notification dated 2 August 2013 as under-
2.25
On roads 24m - 30m 30% of reserved residential land rate 30% of reserved commercial land
wide for additional FAR rate
up to 0.5
0.5-1
up to 1-1.5
On roads more than 60m 50% of reserved residential land rate 50% of reserved commercial land
above1.5
Premium on additional FSI has been used as a fiscal tool in Maharashtra in 2008 when the State Government
proposed in the Budget to allow additional FSI of 0.33 in the suburbs of Mumbai by charging ‘premium’ linked
to ‘Ready Reckoner’ rates. The revenues were to be shared in equal proportion between the State
Government and the Municipal Corporation of Greater Mumbai. The scarcity of development rights created by
constrained FSI Regulations was sought to be exploited by turning it into a fiscal tool. However, charging of
such premium was struck down by Mumbai High Court as ultravires in Writ Petition Number 2443 of 2008
wherein the Honorable High court held that “Section 22 which falls under Chapter III and which requires what
must be the contents of the development Plan, does not expressly confer any power on the state government
or the planning Authority to make a provision for imposing a fee whether regulatory or compensatory…..Once
the legislature has provided for development charge under provisions of Section 124 A, which charge has to
be kept in a separate fund to be used for providing amenities, it is not open for the state or the Planning
Authority to contend that under the guise of giving grant of additional FSI of 0.33 they are entitled to a charge
or a fee for the purpose of providing amenities. The Respondents /state Government has not been able to
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show any provision in the MRTP Act expressly / specifically authorizing any levy of such premium based on
the ready Reckoner value of land per sq. meter “Since there was no legal provision in the MRTP Act for
charging any premium on permitting additional FSI, amendment to the MRTP Act 1966 was therefore
brought by inserting provision for imposition of fees, charges and premium for grant of additional FSI or for
special permission or for use of discretionary powers under the development control legislation. Maharashtra
had to go for Amendment of section 14 by inserting new sub-section (l) at the end of the section as under-
In Section 14 of the principal Act, after clause (k), the following clause shall be added, namely:-
“(l) Provisions for permission to be granted for controlling and regulating the use and development of land
within the jurisdiction of a local authority or the Collector, as the case may be, including imposition of fees,
charges and premium, at such rate as may be fixed by the State Government or the Planning Authority, from
time to time, for grant of an additional Floor Space Index or for the special permissions or for the use of
discretionary powers under the relevant Development Control Regulations, and also for imposition of
conditions and restrictions in regard to the open space to be maintained about buildings, the percentage of
building area for a plot, the location, number, size, height, number of storeys and character of buildings and
density of population allowed in a specified area, the use and purposes to which buildings or specified areas
of land may or may not be appropriated, the sub-division of plots, the discontinuance of objectionable users of
land in any area in reasonable periods, parking space and loading and unloading space for any building and
the sizes of projections and advertisement signs and hoardings and other matters as may be considered
necessary for carrying out the objects of this Act”.
In the case of Ahmedabad Urban Development Authority vs. S.J. Pasawalia, the Supreme Court upheld a
Gujarat High Court judgment where it had been held that in the absence of any express/specific provision in
the Gujarat Town Planning & Urban Development Act authorizing the levy of a development charge on plot
holders who carried out any development/ construction, regulations framed by the Ahmedabad Urban
Development Authority purporting to levy a development charge were illegal. Both the High Court and the
Supreme Court negated the contention that even in the absence of any specific provision, a power to recover
a fee for the purpose of development of the area in question and for implementing schemes of development,
could be implied in the Act as being incidental or ancillary to carrying on the functions for which the
Development Authority had been constituted under the Town Planning Act. The Supreme Court held "in a
fiscal matter it will not be proper to hold that even in the absence of express provision; a delegated authority
can impose a fee or a tax. In our view, such power of imposition of tax and/or a fee by a delegated authority
must be very specific and there is no scope for implied authority for imposition of such tax or fee. It appears to
us that the delegated authority must act strictly within the parameters of the authority delegated to it under the
Act and it will not be proper to bring the theory of implied intent or the concept of incidental and ancillary
power in the matter of exercise of fiscal power.”
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In Chennai, the Chennai Metropolitan Development Authority has made provision for collection of charges for
award of premium FSI in the Development Control Regulations but The Tamil Nadu Town and Country
Planning Act 1971 does not have explicit provisions for levy of any charges for award of additional FSI.
Similar is the position in Karnataka Zonal Regulations of Mangalore 2011 and also in Gujarat General
Development Control Regulations where additional FSI may be permitted on payment of premium or
additional Infrastructure Charge. However, in the absence of explicit provision for levy of a premium or charge
as a tax in the Town and Country Planning Act the legality of the charges is doubtful.
Charging premium for additional FSI is emerging as a popular VCF tool. However, in Chhattisgarh there is no
provision in any Act for charging any premium or fees for grant of any additional FSI. Section 24A of the
Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 provides for construction of an additional floor in a
residential building stating that “where under the provisions of this Act or rules made there under or any other
law enacted under entry 5 of the State List of the Seventh Schedule to the Constitution of India for the time
being in force, regulating the constructions of residential building or any rules or regulations or bye-laws made
there under it is permissible to construct less than three floors then notwithstanding anything contained in the
Act or the law or the rules or the regulations or the bye-laws aforesaid it shall be permissible to construct an
additional floor in such residential building subject to sanction of a plan of such construction under the
aforesaid Act or law, as the case may be”. However, there is no provision for charging any fee on sanction of
an additional floor.
Section 358 of The Chhattisgarh Municipal Act,1961 confers Power on the Municipality to make bye-laws
governing height of buildings; the number and height of storey's composing a building and height of rooms
and the dimensions of rooms intended for human habitation; and the height and slope of the roof above the
uppermost floor but nowhere the power to levy fees or charges for allowing additional height has been
conferred on the state government or any authority.
The position in Rajnandgaon is similar as there is no provision for charging any premium or fees or betterment
levy for grant of any additional FSI in the Rajnandgaon Development Authority Act, 1982 although the
Development Authority has power to regulate the location, height, number of storey and size of buildings and
other structures. Therefore, it is necessary to amend the law and make provision for levy of premium or
charge or betterment levy for grant of additional FSI by inserting provisions in section 68 of the Rajnandgaon
Development Authority Act 1982, similar to the one inserted by Maharashtra into Section 14(1) of the MRTP
Act 1966 as under:-
“Provisions for permission to be granted for controlling and regulating the use and development of land
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within the jurisdiction of a local authority or the Collector, as the case may be, including imposition of fees,
charges, betterment levy and premium, at such rate as may be fixed by Regulations by the State
Government or the Planning Authority, from time to time, for grant of an additional Floor Space Index or for
the special permissions or for the use of discretionary powers under the relevant Development Control
Regulations.”
6.1.9 Rationale for levy of Certain Fee/Charges in Chhattisgarh levied by the State Government in
Rajasthan
(i) Certification of Ownership Application Fee

The Rajasthan Urban Land (Certification of Titles) Bill, 2016 has an objective to providing clear land title to
urban lands - a step towards good governance and increase the Ease of Doing Business. The Rajasthan
Assembly passed the Rajasthan Urban Land (Certification of Titles) Bill, 2016 on 5th April, 2016. With this,
Rajasthan also became the first state to bring and pass Rajasthan Urban Land (Certification of Titles) Bill,
2016.
State residents, can now seek a certificate of ownership of their lands by paying a nominal fee to the state
government. The state government will set up an authority which will seek all the documents from the
landowners, and will verify it against records held by the state. The authority will issue a certificate and a map
to the owner for property with state guarantee. Currently, it is kept voluntary for the owners to apply for this
certificate. The state government has kept the application fee of 0.5% of the land rate determined by a district
level committee to encourage more people to join this new scheme. Through the Bill the state government
has given itself the power to enter into any property or premise for the purpose of survey by giving its owner a
prior notice. Experts believe that this Bill will give a clear title to the owner and will reduce litigations in the
courts. This is seen as one of the key steps towards land reforms and Rajasthan has become the first state to
introduce in the country.
(ii) Development under Land Pooling Bill

The Rajasthan Land Pooling Scheme Bill provides for easy aggregation of small land parcels to undertake
urban development, revenue from which can then be generated through user fee/taxes. This Act will facilitate
acquisition of small land parcels for bigger infrastructure projects. In many big ticket projects, fragmented land
holdings often prove to be tricky in terms of acquisition thereby also affecting the projects. According to this
law, if land owners decide to give up their properties, they would get a proportional share in the developed
land, thereby stimulating easier acquisition. This law has been primarily meant for the development of the
infrastructure & investment promotion regions. The biggest advantage of this law would be that it will speed
up development works and simultaneously would create a fare advantage for those who own the properties,
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where the project would have to be set up. This will help in developing infrastructure as per the master plan.
The land required for development will be shared by all the land owners in the area. People in the area will
contribute land and in return will get developed land in the same proportion. In order to ensure justified
acquisition of land, the government will allocate land close to where it has been taken from, as far as possible.
According to the law, land owners will get up to 55 per cent of the developed land from the authority. Post
development, it could be said that the value of their returned land will be much more than the original value of
their entire land & hence it can be a win-win situation for all the stakeholders involved.
The allocation of land from the total area covered under the scheme include (i) fifteen percent for parks,
playgrounds, garden and open spaces and social infrastructure such as schools, dispensary, fire brigade,
community facilities, and public utility; (ii) fifteen percent for roads; and (iii) fifteen percent for sale by
appropriate authority for residential, commercial or industrial use depending on the nature of development
including minimum 5% for Economically Weaker Sections and Lower Income Group housing. Provided that
the percentage of the allocation of land may be altered depending upon the nature of development and for the
reasons to be recorded in writing. The proceeds from the sale of land referred to in (iii) above shall be used
for the purpose of providing infrastructure facilities.
(iii) Contribution from plots in land pooling scheme

Chapter 3 - Control of Development and Use of Land provides under section 14 of The Rajasthan Land
Pooling Scheme Bill for Restrictions on development after publication of declaration of intention of land
pooling scheme.- (1) On or after the date on which a declaration of intention of land pooling scheme is
published in the Official Gazette under section 4 in respect to any area, no person shall carry out any
development in any building or in or over any land, within the limits of the said area without the permission in
writing of the appropriate authority and without obtaining certificate from it to the effect that development
charge, scrutiny fees or any other fee leviable under this Act has been paid or that no such charge is leviable.
Section 15 of The Rajasthan Land Pooling Scheme Bill -. Application of permission for development - (1) Any
person, intending to carry out any development in any building or in or over any land after the publication of
intention of land pooling scheme shall make an application in writing to the appropriate authority for
permission for such development in such form and containing such particulars and accompanied by such
documents as may be prescribed. (2) Every application under sub-section (1) shall be accompanied by such
fee as may be prescribed. (3) On an application having been duly made under subsection (1) and on payment
of the development charge or betterment charges or any other charges, if any, as may be assessed, the
appropriate authority with the approval of the Land Pooling Officer appointed under section 21 of The
Rajasthan Land Pooling Scheme Bill may- (i) pass an order- (a) granting permission unconditionally; or (b)
granting permission subject to such conditions as it may think necessary to impose; or (c) refusing
permission. (4) The appropriate authority in considering the application for permission shall ensure that it is in
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conformity with the provisions of the land pooling scheme prepared or under preparation under this Act and
where the development or any modification is likely in the opinion of the appropriate authority to interfere with
the operation of the land pooling scheme or to be prejudicial to planned development, or any plan of the local
authority, the appropriate authority may refuse such permission
Section 23 of The Rajasthan Land Pooling Scheme Bill provides the Contents of preliminary and final
scheme.- (4) In the final scheme, the Land Pooling Officer shall - (i) fix the difference between the total of the
values of the original plots and the total of the values of the plots included in the scheme in accordance with
the clause (vi) of sub-section (1) of section 41; (ii) determine whether the areas used, allotted or earmarked
for a public purpose or purposes of the appropriate authority are beneficial wholly or partly to the owners or
residents within the area of the scheme; (iii) estimate the portion of the sums payable as compensation on
each plot used, allotted or earmarked for a public purpose or for the purpose of the appropriate authority
which is beneficial partly to the owners or residents within the area of the scheme and partly to the general
public, which shall be included in the costs of the scheme; (iv) calculate the contribution to be levied under
subsection (1) of section 43 of The Rajasthan Land Pooling Scheme Bill, on each plot used, allotted or
earmarked for a public purpose or for the purpose of the appropriate authority which is beneficial partly to the
owners or residents within the area of the scheme and partly to the general public; (v) determine the amount
of exemption, if any, from the payment of contribution that may be granted in respect of plots exclusively
occupied for religious or charitable purposes; (vi) estimate the increment to accrue in respect of each plot
included in the scheme in accordance with the provisions of section 42; (vii) calculate the proportion of the
contribution to be levied on each plot in the final scheme to the increment estimated to accrue in respect
of such plot under sub-section (1) of section 43 of The Rajasthan Land Pooling Scheme Bill; (viii) calculate the
contribution to be levied on each plot included in the final scheme; (ix) determine the amount to be deducted
from, or added to, as the case may be, the contribution leviable from a person in accordance with the
provisions of section 43 of The Rajasthan Land Pooling Scheme Bill; (x) estimate with reference to claims
made before him, after notice has been given by him in the prescribed manner and in the prescribed form, the
compensation to be paid to the owner of any property or right injuriously affected by the making of the land
pooling scheme in accordance with the provisions of section 46, (5) The Land Pooling Officer shall draw in the
prescribed form the preliminary and the final scheme in accordance with the draft scheme:
Section 42 of The Rajasthan Land Pooling Scheme Bill gives the method of Calculation of increment.- For the
purposes of this Act, the increments shall be deemed to be the amount by which, at the date of the
declaration of intention to make a scheme, the market value of the plot included in the final scheme estimated
on the assumption that the scheme has been completed, would exceed at the same date the market value of
the same plot estimated without reference to improvements contemplated in the scheme: Provided that in
estimating such value, the value of buildings or other works erected or in the course of erection on such plot
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shall not be taken into consideration. Section 43 of The Rajasthan Land Pooling Scheme Bill. Contribution
towards costs of scheme.- (1) The costs of the scheme shall be met wholly or in part by a contribution to be
levied by the appropriate authority on each plot included in the final scheme calculated in proportion to the
increment which is estimated to accrue in respect of such plot by the Land Pooling Officer: Provided that- (i)
(a) where the cost of the scheme does not exceed half the increment, the cost shall be met wholly by a
contribution, and (b) where it exceeds half the increment, to the extent of half the increment it shall be met by
a contribution and the excess shall be borne by the appropriate authority;
Section 52 of The Rajasthan Land Pooling Scheme Bill empowers and gives Power of appropriate authority
to make agreement.- (1) The appropriate authority shall be competent to make any agreement with any
person in respect of any matter which is to be provided for in a land pooling scheme, subject to the power of
the State Government to modify or disallow such agreement and unless it is otherwise expressly provided
therein, such agreement shall take effect on and after the day on which the land pooling scheme comes into
force
6.1.10 Rationale for levy of Land and Building Tax on the market value of lands and buildings in
Chhattisgarh as levied by the Municipal Corporations in Rajasthan.
The Rajasthan Lands and Buildings Tax Act, 1964 is an Act to provide for the levy of a tax on land and
buildings in urban areas of the State of Rajasthan. Section 3 – Levy of Lands and Buildings Tax: (1) With
effect on and from 1st April, 1973, for each year, the State Government shall levy and collect a tax on lands
and buildings situated in an urban area (hereinafter referred to as Lands and Buildings Tax), from the owner
of such lands and buildings, at such rate not exceeding 2% of the market value thereof as the State
Government may, by notification in the Official Gazette declare in this behalf. However, the State Government
may fix graduated rates of tax on different slabs of market values of urban lands and buildings:
But until a notification declaring rate of tax is issued under this sub-section, the rate of tax on lands and
buildings shall be as follows:-
On the first Rs. 1, 00,000/- of the market value of the land and building. Nil
On the next Rs. 2, 00,000/- of the market value of the land and building. ½%
On the next Rs. 7, 00,000/- of the market value of the land and building. 1%
On the balance of the market value of the land and building in excess of Rs. 1½%
10,00,000/-
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Provided further that with effect on and from [the date of commencement of the Rajasthan Lands and
Buildings Tax (Amendment) Act, 1995 (Act No. 14 of 1995)] no tax shall be levied and collected on lands and
buildings situate in an urban area having a population of less than [one and a half lakh according to the latest
census figures. Provided further that if any area is declared a cantonment, or is constituted a Municipality,
after the commencement of the Rajasthan Urban Land Tax (Amendment) Act, 1973, the tax on lands and
buildings situate in such area shall be levied and collected with effect from the commencement of the year
following the year during which the area is declared a cantonment or is constituted a Municipality.
It is suggested that the Land and Building Tax may be levied in Chhattisgarh on the lines of Rajasthan. The
rates of tax may be 1% of the market value of lands per year and the collections from the Land and Building
Tax put in a separate Bank account and reserved for infrastructure development in the city. As per census
2011 the population of Rajnandgaon was about 1.63 lakh. At an average size of 5 per property the estimated
number of properties in Rajnandgaon would be 32600 as in 2011 and can be estimated at 40000 in 2018. If
the smaller plots, say, smaller than 200 square meters estimated to be 8000 (@ 20%) are excluded, from the
levy of Land and Building Tax and estimate average size of the balance taxable plots numbering 32000 to be
200 square meters each and the average market price of land to be Rs. 10000/- per square meter (the
minimum being Rs.1900/- per square meter and going up to Rs.61000/- per square meter) an average plot of
200 square meters would be values at Rs.2000000/- and the annual Land and Building Tax for each property
@ 1% of the market value would come to Rs 20000/-. Thus collection of Rs. 64 crores from the levy of Land
and Building Tax from 32000 properties can be envisaged.
6.2 Proposed amendments
Broadly the following amendments/changes need to be made in the various Acts /Rules/Schedules in
Chhattisgarh.
• Rates of fees for land development/building plan sanction to be made market value of land-based
instead of area based
• Rates of diversion of land use/conversion charges to be amended from area based to land value
based as a percentage of market value on the lines of Mumbai.
• Rates of betterment charges to be amended with provision for some minimum charges regardless of
nominal increase or no increase in land value.
• Conversion charges on change of land use from residential to commercial / industrial in urban areas to
be levied in Chhattisgarh and made land value based on the lines of Mumbai.
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• Chhattisgarh laws to be amended to add provision for charging betterment levy on grant of additional
FAR on the lines of Rajasthan.
• Insertion of new provisions in the Chhattisgarh Municipal Act and the Development Act for charging
Infrastructure Development charge and Infrastructure Augmentation charge in addition to land use
diversion fee/conversion charges on the lines of Faridabad.
• Insertion of new provisions for allowing land pooling and charging fees for making application for land
pooling and for charging contribution from beneficiaries of land pooling plots.
• Insertion of new provisions for land titling and land title certificates on payment of fee.
• Enactment of new law for levy of Land and Building Tax on the lines of Rajasthan.
6.3 Acts/sections/Rules/Bye-laws /Notifications to be amended
6.3.1 Amendment of Section 187A of The Chhattisgarh Municipalities Act. 1961-
Section 187A - Compounding of offences of construction of buildings without permission, (1) Notwithstanding
anything contained in this Act or any other Act for the time being in force or any rules or byelaws made there
under, the offence of constructing buildings without permission or contrary to the permission granted may be
compounded, provided that in compounding the cases, fees shall be charged, as under in respect of the area
of unauthorized construction on the basis of the rate of sale of land determined by the Collector of Stamps for
the area concerned:--
Provided further that the compounding shall be made in case of residential construction by the Chief
Municipal Officer and in case of non-residential construction with the permission of President-in-Council.
This section may be amended to include all compoundable deviations in erection of buildings and
sanction/ regularization of additional FAR.
6.3.2 Amendment of Section 339B of the Chhattisgarh Municipalities Act. 1961
Section 339B - Development of Colonies

(1) The Registration Certificate granted under Sections 339-A shall entitle the colonizer to undertake the
development of one or more colonies in the Municipal area or the Nagar Panchayat area, as the case
may be, subject to the provisions of this Act, and on the following conditions:--
(a) in every residential colony in the Municipal Council or Nagar Panchayat area, out of the total
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area fifteen percent of the land shall have to be transferred by the colonizer to the Chief
Municipal Officer for economically weaker sections on such terms and in such manner as
may be prescribed;
(b) in respect of land on which the Urban Land (Ceiling and Regulation) Act, 1976 was applicable,
the colonizer shall have to transfer land to the Chief Municipal Officer as required under clause
(a);
(c) where the colony is proposed on a small piece of land the area of which is less than one acre,
such colonizer who does not wish to provide land for economically weaker sections as required
in clause (a) shall deposit into the "Service to Poor Fund" of the Municipal Council or the Nagar
Panchyat area, as the case may be, opened in terms of Section 117-A, fee at such rate as may
be prescribed.
(2) In addition to transferring land for economically weaker sections under sub-section (1), the colonizer
shall also reserve at least ten percent fully developed plots of the prescribed size or in alternate offer,
constructed houses/flats of the prescribed size in his residential colony for sale to persons belonging to
lower income group on terms as may be prescribed.
(3) For sale of houses to the economically weaker sections and the lower income group, the procedure for
selection of eligible persons and the determination of the cost of such plots or houses shall be as may
be prescribed by the Government.
(4) Permission to develop colony shall be given by the Chief Municipal Officer and appeal against any
order of the Chief Municipal Officer shall lie before the Government.
The above conditions may be amended by adding further conditions as these do not include a
condition to pay Infrastructure Development Charges in case of new development and Infrastructure
Augmentation Charges in case of addition to the existing infrastructure of an existing colony.
6.3.3 Amendment of Rule 8 of The Chhattisgarh Municipal Corporation and Municipalities (Registration of
colonizer, term and conditions) Rules, 2013.
Rule 8- Application for the development of the colony and permission fee - (1) When a colonizer
registered under rule 3 wants to establish any colony and take up development work, he shall submit an
application to the competent authority together with the fee prescribed under rule 8(2) as under-
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a Municipal corporation having population of 3 lacs or more Rs.50000/-per hectare

b Municipal corporation having population of less than 3 lacs Rs.25000//-per hectare
c Municipal councils Rs.10000//-per hectare
d Nagar palikas Rs.50000//-per hectare
The fee prescribed for development of a colony is area based and should be amended and made land
value based.
6.3.4 Amendment of Rule 11 of The Chhattisgarh Municipal Corporation and Municipalities (Registration of
colonizer, term and conditions) Rules, 2013
Rule 11 - Permission for development work. Permission shall be granted after fulfilling the following
conditions-
(a) Out of plots/flats to be developed 15% of plots/10% of flats shall be reserved for transfer to the
(b) Colonizer shall deposit 2% of the estimated cost of internal development cost of the colony as
(c) Rupees 100//- per square metre for external development of the colony with the Municipality
(d) The rate in (iii) relates to 2011 and will increase @5% per year thereafter.
This Rule may be amended to make the Rates of external development charges land value based and
should include rates of Infrastructure development charge and Infrastructure Augmentation charge at
(v) and (vi) based on market value of land as in case of compounding fee for regularization of
unauthorized construction.
6.3.5 Amendment in section 349 of the Chhattisgarh Municipalities Act, 1961
Section 349 of The Chhattisgarh Municipalities Act. 1961- Fees for licenses and permissions. The Council
may charge such fee as may be prescribed by bye-laws for--
a) any license granted under this Act;
b) any permission granted under this Act
This section may be amended to include -

c) Sanction of additional FAR
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d) Land pooling application fee

e) Contribution by final plot holders in a land pooling scheme
f) Land title certification fee
6.3.6 Amendment of Section 163-A of The Chhattisgarh Municipal Corporation Act, 1956.
Section 163-A - Creation of Infrastructure Development Fund.-

1. Notwithstanding anything contained in this Act or any other Act for the time being in force, the State
Government may create an Infrastructure Development Fund with a view to assist the Municipal Corporation
in developing the infrastructure. 2. The sources of the infrastructure fund and the procedure and manner in
which the amount from the fund shall be provided to Municipal Corporation shall be such as may be
prescribed.
This section may be amended to include the collections from Infrastructure development charges and
Infrastructure Augmentation charges.
6.3.7 Amendment of Section 308-B of the Chhattisgarh Municipal Corporation Act, 1956.
Section 308-B -Relaxation in Compounding the unauthorized construction.- (1) Notwithstanding

anything contained in Section 308-A or any other provisions of this Act or any other law for the time being in
force , the Commissioner may, on the application made in this behalf by order, compound the cases involving
deviations from the approved plan or map, or construction made without permission by collecting
compounding fee at such rate as may be determined by the State Government.
This section may be amended to include compounding of deviations in erection of buildings and
sanction of additional FAR.
6.3.8 Amendment of Rule 12 of The Chhattisgarh Nagar Tatha Gram Nivesh, Niyam, 1975.
Section 29 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 - Application for permission for
development by others provides under sub-section 29 (2) that Such application for permission for
development shall also be accompanied by such fee as may be prescribed.
For prescribing the fee Section 85 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 confers
Powers to make rules on The State Government which may, after previous publication, make rules for
carrying out the purposes of this Act and In particular and without prejudice to the generality of the foregoing
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power, such rules may provide for the fee which shall be accompanied with the application under Section 29
(2).Accordingly The Chhattisgarh Nagar Tatha Gram Nivesh, Niyam, 1975 were framed.
Rule 12 of The Chhattisgarh Nagar Tatha Gram Nivesh, Niyam, 1975 provides that - (A) Any person not
being the Union Government, State Government, or Local Authority, special authority shall apply under the
sub-section (1) of section 20 in Form VII for permission for development of land and in Form VIII for
development of land along with the schedule and specification sheet attached with the application form.
(B) Fees. – Every application submitted under sub-section (2) of section 29 shall be accompanied by a fee
specified below :-
(a) For the development of land other than erection of a building Rs. 50 per acre or part thereof.
(b) For building operation.
Serial Area Rate of Fee For Rate of fee for

No. Ground Floor subsequent storey
1 2 3 4
i For a ground floor area up to 1200 sq.ft Rs.20/- Rs.15/-per storey
ii For a ground floor area of more than 1200 sq.ft. but Rs.25/- Rs.20/-per storey
not exceeding 3000 sq.ft.
iii For a ground floor area of more than 3000 sq.ft. but Rs.50/- Rs.40/-per storey
not exceeding 6000 sq.ft.
iv For a ground floor area more than 6000 sq.ft. & Rs.75/- Rs.50/-per storey
above.
The rates are area based which may be amended and made market value of land based.
6.3.9 Amendment of Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973
Section 59 of The Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 provides for levy of Development
charges. Section 59 (1) states that Where as a result of the implementation of town development scheme,
there is, in the opinion of the Town and Country Development Authority, as appreciation in the market values
of lands adjacent to and affected by a scheme the Town and Country Development Authority may, in lieu of
providing for the acquisition of such land, levy development charges on owners of such land. Sub-section
59(2) lays down the rate for levying development charges. It states that The development charges shall be an
amount equal to not less than one-fourth and not more than one-third of the difference between the value
of the land on the date of publication of the intention to prepare the town development scheme and the date of
completion of the scheme.
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Levy of Development charges under Section 59 (1) is dependent upon incurring of expenditure on
development of an area so that as a result of the implementation of town development scheme the
value of land increases. However it has not been envisaged that in some years there may be no
increase in land values for various reasons in spite of investment of substantial funds by the state on
development of an area, In such cases even the cost recovery of the expenditure incurred by the state
may not be possible leaving the state /ULB without funds for continuing the development works for
the citizens .Therefore provision may be made in section 59 for charging the cost of the scheme
spread over the beneficiary properties/area as the minimum levy of development charge and the share
of ½ or 1/3 of the increment in land values may be kept as the upper limit.
6.3.10 Amendment of Rule 21(3) of The Chhattisgarh Bhumi Vikas Rule, 1984
Rule 21. Fees - (1) Validity of Notice subject to payment of Fees-No notice as referred to in rule l6 shall be
deemed valid unless the person giving notice has paid the fees for the time being in force to the Authority and
an attested copy of the receipt of such payment is attached with the notice. (2) In case the authority after
processing the application of building permit, the building permission/development. (3) Scale of Fee.-The
scale of fee shall be as under:-
A For permission for development Fee
(i) For development of area up to I hectare Rs. 2500/-
(ii) For development of area exceeding I hectare but not exceeding 2.5 hectare Rs. 5000/-
(iii) For development of area 'exceeding 2.5 hectare but not exceeding 5 hectare Rs. 10000/-
(iv) For development of area exceeding 5 hectare for every hectare or part additional fee at Rs.
thereof 2500/-

1 A building intended to be exclusively 0 75 500
for residence 76 125 875
126 200 1500
201 300 2250
301 400 3000
401 600 5000
601 750 6250
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751 1000 8750
l00l 1250 12500
l25l 1500 I7500
l50l 2000 25000
2001 2500 37500
2500 Above 37500 and l5 per
square meter for
additional fees
2 A building intended to be used as Fee specified in item no. 1 together with an additional
shop, store house, factory or for charge of 50% of such amount of fees, except that for a
carrying or trade or business or any built up area above 2500 square meter the fees chargeable
other commercial or industrial purpose. shall be Rs. 15/- per square metres for additional fees.
3 A building intended to be used as Fees as prescribed in item no. 1
administrative block in a factory.
4 A building intended to be used for Fees specified in item no. 1 together with an additional
shop-cum-residence purposes. charge of 50% such amount of fees.
5 A building intended to be used as Up to 800 seating capacity @ Rs.15,000/-;
cinema theatre. Above 800 seating capacity @ Rs. 25,000/-
6 A building intended to be used for any 50% of fees specified in item No. 4
social charitable culture, educational
purposes, Dharmshala and similar
types of building and for any other
purpose not specifically provided for.
7 Addition or alteration with built up area Rs. 100/- in each case of building mentioned in item 1, 3
or external addition or alteration which and 6 Rs. 500/- in each case of building mentioned in item
does not add to the built up area such No. 2. 4 and 5.
as Court yard compound N-4 wall,
alteration in elevation or roofing such
tiles to A.C. Sheet or flat surface,
additional opening or closing not
covered by proviso to sub-rule (l) of
Rule 14.
8 ln case of addition alteration in the Up to 5% Nil. above 5% to 10% - Rs. 125/-. Above I0%
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proposed plan. fresh application according to the rule shall be necessary
9 Revaluation of the building permission l0% of the amount of fees charged originally in respect of
the building
S.No. C. For permission for high-rise building

Type of construction Fees chargeable in Rupees
2 A building intended to be used as shop, store , house, Fees prescribed in item no. 1 with additional
factory or for carrying on trade or business or any other charges of 100% of amount of fees.
commercial or industrial purpose.
3 A building intended to be used as administrative block in a Fees as prescribed in item no. 1
factory.
4 A building intended to be used for shop cum- residence Fees specified in item no. 1 together with
purposes. additional charges of 50% of such amount of
fees.
5 A building intended to be used for any special, charitable, 50% of fees specified for item no. 1
cultural, educational purposes, including hospital, school,
club, Dharmshala and similar types of building and for any
other purpose not specifically provided for.
S.No. D. Fees for the permission of development of Integrated Township

Name of Planning / Special Area Fees
1 Raipur, Naya Raipur Rs. 200 per sq. rneter
2 Bilaspur, Korba, Bhilai Rs. 150 per sq. meter
3 Other Planning & Special Area Rs. 100 per sq. Meter
The scale of fees is area based per hectare /per square meter which may be made land value based.
6.3.11 Amendment of Rule 95 of The Chhattisgarh Bhumi Vikas Rules, 1984
Rule 95 of The Chhattisgarh Bhumi Vikas Rules, 1984 contains the Power of relaxation given to the
Director of Town and Country Planning, Government of Chhattisgarh who may permit special relaxation to
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any of the rules, provided the relaxation sought does not violate the health safety, fire safety. structural safety,
public safety of the inhabitants and the building and neighborhood.
However Rule 95 of The Chhattisgarh Bhumi Vikas Rules 1984 does not empower the Director to
charge any fees for granting the relaxation which may be added by amending this Rule.
6.3.12 Amendment of section 258 of The Chhattisgarh Land Revenue Code, 1959 regarding premium on
diversion of land use.
Section 59 (5) of The Chhattisgarh Land Revenue Code, 1959 provides that where land for use for any
purpose is diverted to any other purpose and land revenue is assessed thereon under the provisions of this
section, the competent authority shall also have power to impose a premium on the diversion in accordance
with rules made under the Land Revenue code,1959.
Section 258 of The Chhattisgarh Land Revenue Code, 1959 provides for the General rule making power of
the state Government. Section 258(1) empowers the state government to make rules generally for the
purpose of carrying into effect the provisions of this code and sub-section 258(2) further lays down that in
particular and without prejudice to the generality of the foregoing powers such rules may provide for (iii)
regulation of assessment of land revenue on diversion of land to other purposes and imposition of premium
under section 59; (iv) diversion of survey numbers into sub-divisions and apportionment of the assessment of
survey number among the sub-divisions of a survey number under section 70; (xiv) the manner of dividing plot
numbers into sub-divisions and apportioning the assessment of plot number among ,the sub-divisions; and
the limits either of area or of land revenue or both in any local area for recognition of sub-divisions under
section 94.
However, this section does not provide for the power to levy any premium or fees on (vi) – diversion
of survey numbers into sub-division. Also it does not provide for allowing amalgamation of plots and
for charging premium or fees for allowing amalgamation of plots. Therefore, in order to do all that
section 258 may be amended accordingly
6.3.13 Amendment of Rule 14 of the Rules regarding Alteration of Assessment and Imposition of premium
for the purpose of levy of premium on Agricultural land.
Rule 14 (1) - For the purpose of levy of premium of agricultural land other than the land specified in the
proviso to sub-section (5) of section 59 of the code diverted to non-agricultural purposes, in any town and
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village in the state of Chhattisgarh shall be divided into the following classes as shown in column (1) of
schedule-A appended to these Rules and the premium shall be imposed according to the rates specified in
column (2), (3), (4), (5), (6) and (7) of the said Schedule.
Schedule-A
purpose Unit/ or Industrial Institutional Facility
Colony/ Purpose Purpose
Project
Municipal Rs.15/-per Rs.20/-per Rs.25/-per Rs.20/-per Rs.20/-per Rs.15/-per
Corporation sqm. sqm sqm sqm sqm sqm
and Nagar
Palika area
5 km within Rs.10/-per Rs.15/-per Rs.20/-per Rs.15/-per Rs.15/-per Rs.10/-per
Municipal sqm sqm. sqm sqm sqm sqm
Corporation
and Nagar
Palika area
The above schedule of rates of premium is clearly area based per square meter and may be amended
on land value basis.
6.3.14 Amendment of Section 51 of the Chhattisgarh Griha Nirman Mandal Adhiniyam, 1972 relating to
Betterment charges.
Section 51 CHAPTER XI - Assessment and Recovery of Betterment Charges.

Betterment charges - (1) When by making of housing scheme any land in the area comprised in the scheme
will in the opinion of the Board be increase in value, the Board in framing the scheme may declare that
betterment charges shall be payable by the owner of the land or any person having an interest therein in
respect of the increase in value of land from the execution of the scheme. (2) Such increase in value shall be
the amount by which the value of the land on the completion of the execution of the housing scheme,
estimated as if the land were clear of the buildings exceeds the value of the land prior to the execution of the
scheme estimated in like manner and the betterment charges shall be one half of such increase in value.
Levy of Betterment charges by the Housing Board under Section 51 is dependent upon incurring of
expenditure on betterment of an area so that as a result of the implementation of town development
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scheme the value of land increases. However it has not been envisaged that in some years there may
be no increase in land values for various reasons in spite of investment of substantial funds by the
Housing Board on development of an area, In such cases even the cost recovery of the expenditure
incurred by the Housing Board may not be possible leaving the Housing Board without funds for
continuing the development works for the citizens .Therefore provision may be made in section 51 for
charging the cost of the scheme spread over the beneficiary properties/area as the minimum levy of
betterment charge and the share of ½ of the increment in land values may be kept as the upper limit.
6.4 Need for Separate Accounting for diversion Charges, Conversion charges, Betterment charges and
Betterment levy:
Section 132A of The Chhattisgarh Municipal Act, 1961 relates to Creation of Infrastructure Development Fund
by the state government. Section 132A(1) state that Notwithstanding anything contained in this Act or any
other Act for the time being in force, the State Government may create an Infrastructure Development Fund
with a view to assist the Municipalities in developing the infrastructure.
Section 132A (2) further provides that The sources of the infrastructure fund and the procedure and manner in
which the amount from the fund shall be provided to Municipalities shall be such as may be prescribed.
However the levy and collection of diversion charges, conversion charges/Betterment charges and
Betterment levy is presently not required to be deposited into any such Fund and not directly linked to
incurring of actual expenditure on infrastructure .The Corporation Act, the Development Authority Act and the
Housing Board Act do not make explicit provisions for a direct nexus between the payment of these Charges
and levy and its use only for creation of infrastructure by reserving the collections and putting it into separate
bank accounts and prohibiting its use for other purposes. As a result the same may be used for paying
salaries to the detriment of development of infrastructure.
There is a need for making it mandatory for the Corporation, the Development Authority and the
Housing Board to keep the collections from these Charges and levy in separate Infrastructure
Development Fund and deposited in separate Bank account so as to use it exclusively for up
gradation and creation of infrastructure.
6.5 Timeline for Implementation
6.5.1 Short term action (up to 1 year):
Short term action plan will include – firstly, issuance of Administrative Instructions like annual notification of
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land and building rates for all localities and secondly, amendment of the different Rate Schedules for making
the tax rates value based in place of area based as suggested in this chapter. The amendment of the Rate
Schedules by the Government through issuance of notifications is authorized in the various Acts. It is
permissible for the Government under the present law to amend the same by issuance of notifications in the
official Gazette. It can also be done by amendment of Bye-law. For instance Section 349 of The Chhattisgarh
Municipalities Act, 1961 relating to Fees for licenses and permissions provides that “The Council may charge
such fee as may be prescribed by bye-laws for (i) any license granted under this Act; and (ii) any permission
granted under this Act”.
Section 366(3) of The Chhattisgarh Municipal Corporation Act, 1956 - Licenses and Permissions, provides
that “Except when it is otherwise expressly provided in this Act or in any rule or bye law made there under, a
fee for every such license or written permission may be charged at such rates as may be fixed by the
Corporation and such fee shall be payable by the person to whom the license is granted”.
Section 29 (2) of the Chhattisgarh Nagar Tatha Gram Nivesh Adhiniyam, 1973 provides for “Application for
permission for development by any person, not being the Union Government, State Government, a local
authority or a special authority constituted under this Act, intending to carry out any development on any land,
and that such application shall also be accompanied by such fee as may be prescribed.
6.5.2 Medium term action plan (1 to 3 years):
Medium term action plan will include amendment of the Rules, Regulations and Bye-laws which normally
require to be placed on the table of the Legislative Assembly and which are subject to modifications which
may be made by the Assembly. For instance, Section 355 of The Chhattisgarh Municipalities Act, 1961
relates to Power to make rules and provides under section 355 (1) that in addition to any power specially
conferred by this Act, the State Government may prescribe forms and make rules generally for the purpose of
carrying into effect the provisions of this Act.
Section 356 of The Chhattisgarh Municipalities Act, 1961 makes General Provision regarding rules and
section 356 (1) states that All rules for which provision is made in this Act, shall be made by the State
Government and shall be Consistent with this Act. Section 356(2) further provides that All rules may be
general for all Municipalities or for all Municipalities not expressly exempted from its operation, or may be
special for the whole or any part of any one or more Municipalities, as the State Government may direct.
Section 356 (3) mandates that All rules shall be subject to publication in the gazette and section 356 (4)
makes it mandatory that All rules shall be laid on the table of the Assembly.
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Section 357 of The Chhattisgarh Municipalities Act, 1961 contains General Provision regarding bye-laws.
Section 357 (1) provides that All bye-laws for which provision is made in this Act shall be made by the Council
and shall be consistent with this Act, and with the rules made there under. Section 357 (2) further states that
A bye-law may be general for the whole Municipality under the jurisdiction of the Council making it, or special
for any part of such Municipality, as the Council may direct. Section 357 (3) makes it clear that Unless
specially excepted in this Act from the operation of this subsection no bye-law shall take effect until it has
been confirmed by the State Government. Also section 357 (4) further stipulate that Unless specially excepted
in this Act, from the operation of this subsection, no bye-laws shall take effect until it has been published in
the manner prescribed by rules made under this Act.
Section 358 of The Chhattisgarh Municipalities Act, 1961 relating to Power to make bye-laws states that in
addition to any power specially conferred by this Act, the Council may, and if so required by the State
Government shall, make bye-laws for--
(1) Municipal administration--
(h) determining the rates of fees for notice, warrant or maintenance of livestock under Chapter VIII;
(i) regulating entry and inspection for the purposes of this Act;
(j) generally for the guidance of Municipal Officers and servants in all matters relating to municipal
administration;
(2) Taxation--
(e) the submission of returns by person liable to pay any tax under this Act;
(h) any other matter relating to the levy, assessment, collection, refund or remission of taxes under this Act;
(3) Buildings--
(a) the regulation or restriction of the use of sites for building for different areas;
(b) the regulation or restriction of buildings in different areas;
(c) the form of notice of erection of any building or execution of any work and the fee in respect of the same;
(d) the plans and documents to be submitted together with such notice and the information and further
information to be furnished;
(e) the level and width of foundation level of lowest floor and stability of structure;
(f) the construction of buildings and the materials to be used in the construction of building;
(g) the height of buildings whether absolute or relative to width of streets or to different areas;
(h) the number and height of storey's composing a building and height of rooms and the dimensions of rooms
intended for human habitation;
(i) the height and slope of the roof above the uppermost floor upon which human beings are to live or cooking
operations are to be carried;
(j) the provision of open spaces, external and internal, and adequate means of light and ventilation;
(v) the supervision of buildings
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The procedure for making the Rules is very simple in as much as every rule made under these Acts/Sections
shall be laid before the Legislative Assembly and unless modified or dropped by the Assembly the rule shall
have effect.
The medium term actions will include amendment of Bye-laws and Rules.
6.5.3 Long term actions (more than 3 years):
Long term actions would basically include amendment of Acts/ Laws. This is a time–consuming and difficult
process which requires legislative intervention and approval. For instance, amendment of the Municipalities
Act and the Housing Board Act for amending the basis of levy of betterment charges, and the Development
Authority Act, for providing legal authority for charging premium for grant of additional FAR. Also new
provisions for levy of Infrastructure Development Charges and Infrastructure Augmentation Charges will be
required to be added into the Development Authority Act. Further, it would be better in a long term
perspective, to lay down the share of various Urban local bodies out of taxes, charges, fees and duties to be
collected – to be distributed amongst all Urban local bodies in a rational manner keeping in view their
respective duties and responsibilities for providing civic services and modern infrastructure to the citizens of
the city or lay down the principles for sharing of revenues between the Municipal Corporation, Councils ,and
Development Authorities, and the Authorities administering the Revenue code in the respective areas by
amending the provisions in the Development Act, the Municipal Act and the Revenue Code.
6.6 Contractual Agreements/ MOU etc. (to be addressed during handholding phase in consultation with
stakeholders)
The drafting of the amendments will be done in consultation with the concerned authorities during the
handholding period.
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Key Contact
Ajay Agrawal
Director – Planning and Infrastructure
Phone: +91 9599620019
Email: ajay.agrawal@in.knightfrank.com
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17284final Report VCF Rajnandgaon With Summary

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17284final Report VCF Rajnandgaon With Summary

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Final Report

TABLE OF CONTENTS ............................................................................................................................................ 2

LIST OF FIGURES ................................................................................................................................................... 6

LIST OF TABLES .................................................................................................................................................... 7

LIST OF ABBREVIATIONS ....................................................................................................................................... 8

EXECUTIVE SUMMARY ........................................................................................................................................... 9

1.1 INTRODUCTION TO VALUE CAPTURE FINANCE ................................................................................................ 18

2 VCF TOOLS ................................................................................................................................................. 24

2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA ................................................................................ 24

3.1 DEMOGRAPHIC PROFILE ............................................................................................................................ 36

3.2 CITY GROWTH ......................................................................................................................................... 40

4 EXISTING LAND BASED FISCAL TOOLS IN RAJNANDGAON .......................................................................... 53

4.1 FINANCIAL POSITION OF MUNICIPAL CORPORATION RAJNANDGAON ................................................................... 53

5 IDENTIFICATION OF APPLICABLE VCF TOOLS FOR RAJNANDGAON ............................................................. 88

5.1 PROPERTY TAX........................................................................................................................................ 88

6 IMPLEMENTATION FRAMEWORK ............................................................................................................... 105

6.1 IDENTIFICATION OF CLAUSES TO BE AMENDED ................................................................................ 105

Figure 1 : Diagrammatic Presentation of the Concept of VCF .............................................................................. 19

Table 3-1: Ward-wise Population of Municipal Corporation Rajnandgaon ............................................................ 39

AMRUT Atal Mission for Rejuvenation and Urban Transformation

• Plan work for the assignment

Deliverable – Inception Report

• Collection of relevant data for Rajnandgaon

• Efficacy of existing land based fiscal tools

• Short, medium and long-term implementation plan

Deliverable – Draft Report 1

• Presentation of ULB officials

• Incorporation of changes suggested indicated by the ULB officials.

Deliverable – Draft Report 2

• Presentation of ULB officials

• Incorporation of changes suggested indicated by the ULB officials.

Deliverable – Final Report

IDENTIFICATION OF APPROPRIATE VCF TOOLS FOR RAJNANDGAON

• All the properties to be mapped and linked to GIS.

• Online system of demand and collection to be introduced.

• GIS Mapping of all properties – A Short Term Measure (0-1 year).

Rental Income from Immovable Properties

Building Permission Fee

• Rationalization of Building Permission Fee based on the Collector Rate of land.

• Rationalization of Development Charges based on the Collector Rate of land.

Premium on Relaxation of Rules or Additional FSI/FAR

• Introduction of provision of sell-able FAR in the Act.

Revenue from Street Vendors

Revenue from Parking

1.1 INTRODUCTION TO VALUE CAPTURE FINANCE

Figure 1 : Diagrammatic Presentation of the Concept of VCF

Net Increase in value after public investments

Value without public

Figure 2: Diagrammatic Presentation of the Concept of VCF

1.2 OBJECTIVE OF STUDY

1.3 SCOPE OF THE ASSIGNMENT

The scope of the assignment covers:

• Provide any other suggestions for effective use of VCF Tools

1.4 NEED OF VCF FOR RAJNANDGAON

2.1 STANDARD LAND BASED FISCAL TOOLS IN INDIA

2.1.1 Land Value Tax

2.1.2 Development Charges (Impact Fee)

Development Charges (Impact Fee) is imposed by a local government on a new or

2.1.3 Betterment Levy

2.1.4 Vacant Land Tax

2.1.5 Fee for Changing Land Use

2.1.6 Transfer of Development Rights (TDR)

2.1.7 Premium on Additional FSI/FAR